Income tax, CGT and entities

Franking credits (imputation)

Franking credits, also called imputation credits, represent the company tax a company has already paid on profits it distributes as dividends. A shareholder who receives a franked dividend includes the franking credit in their assessable income and then receives a tax offset for the same amount, so company profits are not taxed twice. A company keeps a franking account to track credits and debits, and it must frank dividends within the rules, including the benchmark rule that stops different franking percentages in the same period. Trusts and partnerships pass franking credits through to their members. The ATO's imputation pages explain how the credits flow and how a practice records them.

General information, not tax advice. The rules change, so check the source page above for the current position. Fedix is developed by Tax7 R&D Pty Ltd.