Exempting companies

  • The Australian tax laws contain rules to prevent companies that are less than 5% effectively owned by non-exempt Australian residents from conveying franking benefits to Australian resident shareholders. These companies are called exempting entities.
  • Changes are made to the exempting entity rules to allow a NZ franking company to be 'looked through' to find effective Australian ownership, so NZ franking companies will not automatically be treated as exempting entities.
  • A NZ listed company that is a NZ franking company, along with its Australian or NZ 100% owned subsidiaries will also not be treated as exempting entities.
  • In cases of wholly owned groups that include a company that is not resident in Australia or NZ, if the NZ parent company is a NZ franking company and is not treated as an exempting entity, none of the companies in that wholly owned group will be an exempting entity.
    Last modified: 07 Oct 2015QC 16903