Dividends paid by New Zealand resident companies do not normally carry Australian franking credits. However, a New Zealand company can choose to join the Australian imputation system and distribute Australian franking credits with its dividends. The company may be referred to as a New Zealand franking company.
Did the SMSF receive Australian franking credits attached to a distribution from a New Zealand company?
No |
Leave E blank. Go to F. |
|---|---|
Yes |
Read on. |
Write at E the total Australian franking credits, attached to assessable franked distributions from New Zealand companies, that the SMSF received in 2015–16. The amount at E should not be reduced by any loss or outgoing related to the income.
The SMSF must have included the assessable franked distribution at D1 Gross foreign income. To work out whether the distribution is assessable in Australia, see the .
If the SMSF received a supplementary dividend (or a share of it), in connection with the franked dividend, and the SMSF is entitled to a foreign income tax offset because the franked dividend is included in the SMSF's assessable income, you must reduce the Australian franking credits that the SMSF received directly or indirectly from a New Zealand company by the amount of the supplementary dividend (or the SMSF's share of it).
You must also include the Australian franking credits that you include here at E, at either:
- E1 Complying fund’s franking credits tax offset in Section D if the SMSF is a complying fund, or
- C2 Rebates and tax offsets in Section D if the SMSF is a non-complying fund.
The amount at E could include any Australian franking credits attached to assessable franked distributions that the SMSF received from a New Zealand franking company either:
- directly, or
- indirectly through a partnership or trust.
Do not include:
- the dividend from the New Zealand company (include this at D1 Gross foreign income)
- New Zealand imputation credits (you cannot claim New Zealand imputation credits in Australia)
- franking credits attached to a dividend that is non-arm's-length income of a complying SMSF (include these at U1 Net non-arm's-length private company dividends).
For more information, see Trans-Tasman imputation overview factsheet.
Legislation
Subdivision 220-B of the Income Tax Assessment Act 1997
Example: Australian franking credits from a New Zealand company
In 2015–16, SMSF E owned shares in a New Zealand company that participates in the Australian imputation system. SMSF E received $10,000 dividends, $1,000 New Zealand franking credits and $500 Australian franking credits. SMSF E is a complying SMSF.
SMSF E reports:
D1 Gross foreign income $10,000
D Net foreign income $10,000
E Australian franking credits from a New Zealand company $500
E1 Complying fund’s franking credits tax offset in Section D $500
It does not include the New Zealand franking credits anywhere on the SMSF annual return.
End of example