The following organisations may be eligible for franking credits:
- registered charities that are endorsed as exempt from income tax
- income tax exempt deductible gift recipients (DGRs)
- income tax exempt developing country relief funds
- entities that are prescribed as exempt institutions and eligible for a refund under the regulations
- income tax exempt institutions that are eligible for a refund under a Commonwealth law other than the income tax law.
Franking credits arise for shareholders when certain Australian-resident companies pay income tax on their taxable income and distribute their after-tax profits by way of franked dividends. These franked dividends have franking credits attached. Franked dividends are received either directly as a shareholder or indirectly as a beneficiary of a trust.
Organisations that receive a dividend from a New Zealand company with Australian franking credits attached to it can obtain a refund of those credits, if they would have been able to claim the credits had the dividend been paid by an Australian company.
New Zealand franking credits cannot be claimed.
If the New Zealand company that paid the dividend has not specified that the franking credit is Australian, you should contact the company to work out whether the franking credit is an Australian or New Zealand franking credit. In most cases, if it is not specified as Australian, it will be a New Zealand franking credit.
Endorsed charities
To be eligible for a refund of franking credits, a charity must meet all of the following requirements:
- satisfy the residency requirement
- be a registered charity with the Australian Charities and Not-for-profits Commission (ACNC) and endorsed by us as exempt from income tax.
Deductible gift recipients
To be eligible for a refund of franking credits, an endorsed income tax exempt deductible gift recipient (DGR) must meet all the following:
- satisfy the residency requirement
- be endorsed by us as a DGR in its own right.
A DGR must be endorsed in its own right. It is not sufficient if your DGR is only endorsed in relation to a fund, authority or institution that it operates, such as a school building fund.
To be eligible for a refund of franking credits, an income exempt DGR listed by name must meet all the following:
- have an ABN
- satisfy the residency requirement
- be a DGR listed by name in the Income Tax Assessment Act 1997.
Developing country relief funds
An entity is eligible if it is an income tax exempt relief fund declared by the Treasurer to be a developing country relief fund. It must not be prescribed by regulation as ineligible for the concession.
See also:
Franking credits attached to franked dividends received by the following organisations may be refundable, provided the eligibility criteria are met; registered charities that are exempt from income tax, deductible gift recipients (DGRs), developing country relief funds, and exempt institutions that are eligible for a refund under a Commonwealth law other than the income tax law.