Imputation system and dividends
The imputation system applies to non-share dividends in the same way that it applies to dividends. A non-share dividend may be franked or unfranked. Any amount of the dividend you receive, whether franked or unfranked, or any amount of franking credit carried by the dividend should be shown in your tax return as if it were a dividend paid on shares.
Dividends on non-equity shares
Under the imputation system, dividends paid on certain shares that are classified as non-equity shares (for example, some redeemable preference shares) are treated as unfrankable distributions for imputation purposes. Therefore, these dividends can't be franked.
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