Simplified imputation: entitlement to franking deficit tax offsets has become law

What are the main changes as a result of the new rules?

  • The rules set out a new mechanism for calculating a taxpayer's entitlement to a franking deficit tax (FDT) offset. This mechanism is set out in a new method statement.
  • The new rules apply to only allow an FDT offset for FDT incurred in the current year or prior years.
  • The new franking deficit tax offset rules contain provisions that replaced the franking additional tax provisions which operated under the former imputation rules. The new rules operate to reduce the amount of an FDT offset by 30% where the franking deficit for an income year exceeds 10% of the total franking credits that arose during the income year.
  • There are also special rules that apply to late balancing entities that elect to determine their FDT on a 30 June basis.
    Last modified: 04 Nov 2015QC 17305