Simplified imputation: comparative overview between the old and new imputation systems

This fact sheet provides a comparative overview between the old and new imputation systems.

This fact sheet also contains links to other fact sheets in the series on imputation.

Key points

  • The new simplified imputation system took effect from 1 July 2002.
  • The currency of the franking account now operates on a 'tax-paid' basis rather than a 'taxed income' basis.
  • A new rule, the 'benchmark rule' has replaced the 'required franking amount' rules, and while similarly limiting streaming opportunities, provides greater flexibility in allocating franking credits to frankable distributions.
  • For the purposes of the benchmark rule, a new concept of franking periods has been introduced.
  • A simpler method for franking distributions has replaced the requirement to make a declaration.
  • The period for determining franking deficit tax has been aligned to the income year, and the concept of franking year has been discontinued.
  • The franking account is now a rolling-balance account. Because of this it is no longer necessary to carry forward a surplus balance of franking credits from the prior income year.
  • The gross-up and credit approach replaces the inter-corporate dividend rebate for companies in receipt of franked distributions.

Status and changes

The information in this fact sheet is based on the New Business Tax System (Imputation) Act 2002 which, passed without amendment and received Royal Assent on 29 June 2002, and Part IIIAA of the Income Tax Assessment Act 1936 which applies to events before 1 July 2002.

The information in this publication is current at 9 July 2003.

    Last modified: 28 Jul 2016QC 17005