A corporate tax entity may apply for permission to depart from the benchmark rule. You must apply in writing to the Commissioner of Taxation. You can apply either before or after a distribution is made.
The Commissioner will permit a departure in extraordinary circumstances only. Generally, these circumstances would be unforeseeable and beyond the control of the entity, its members and controllers. A change in ownership of an entity would rarely amount to extraordinary circumstances.
You should include all relevant information in support of your application. In particular, you should address the following factors:
- the entity’s reasons for departing, or proposing to depart, from the benchmark rule
- the extent of the departure or proposed departure from the benchmark rule
- if the circumstances are within the entity's control, the extent to which the entity has previously sought permission for departure from the benchmark rule in the past
- whether a member of the entity has been or will be disadvantaged by the departure or proposed departure (for example, because the member will receive a distribution with a lower franking percentage than the distribution received by another member)
- whether a member of the entity will receive franking (imputation) benefits in preference to other members of the entity as a result of the departure
- any other matter that you believe the Commissioner would consider relevant.
Allocation of a franking credit at a percentage specified by us under this provision will be taken to comply with the benchmark rule.A corporate tax entity may apply to the ATO in writing for permission to depart from the benchmark rule, before or after a distribution is made.