The Australian Taxation Office (ATO) oversees the administration and regulation of franking credits in Australia. Here are a few key points regarding the ATO’s role in relation to franking credits:
- Determination of franking rates: The ATO sets the franking rates for companies. The franking rate is determined based on the company tax rate applicable to the profits from which dividends are paid. The ATO publishes the applicable franking rates for each financial year.
- Reporting and disclosure: Companies are required to provide information about franking credits and franked dividends to their shareholders. This includes disclosing the franking rate, the franking credit attached to the dividend, and any other relevant details. Shareholders can find this information on their dividend statements and in the Annual Tax Statements issued by companies.
- Lodging tax returns: Individual taxpayers, including retirees, are responsible for reporting their dividend income and franking credits on their tax returns. The ATO provides guidelines and instructions on how to include franking credits when lodging tax returns.
- Assessing tax liabilities: The ATO assesses the tax liabilities of taxpayers, taking into account the franking credits they have received. The franking credits are used to offset the tax payable on the dividend income, potentially resulting in a reduction of the overall tax liability or a refund if the franking credits exceed the tax payable.
- Changes to franking credit refunds: In recent years, there have been changes to the availability of cash refunds for excess franking credits. From July 1, 2019, most taxpayers are not eligible for cash refunds unless they qualify for certain exemptions. It is important to review the ATO guidelines or consult a tax professional to understand the specific rules and requirements.
The ATO provides detailed information and resources on franking credits on its official website. If you have specific questions or need clarification regarding franking credits and their treatment, it is recommended to visit the ATO website or seek professional advice from a tax professional.