The changes mean a co-operative company is able to choose whether to frank distributions made to its members from assessable income for the current income year on or after 1 July 2002. In the past, co-operative companies had only limited capacity to frank profits. This is because the co-operative company was instead given a deduction for the amount of assessable income it distributed and was only allowed to frank distributions made from income other than assessable income.
As a result of the amendments, co-operative companies are able to choose whether to frank distributions sourced from assessable income or claim a deduction for those distributions. If they choose not to frank the entire distribution from this source, a deduction is still allowed for the unfranked part of the distribution.