In Australia, franking credits are available to individuals and entities that receive dividends from Australian companies. Here are some key points regarding eligibility for franking credits:
- Shareholders: Any individual or entity that owns shares in Australian companies and receives dividends is eligible for franking credits. This includes individual shareholders, self-managed superannuation funds (SMSFs), trusts, and other entities.
- Australian resident taxpayers: To be eligible for franking credits, the shareholder must be an Australian resident for tax purposes. Non-resident shareholders may be subject to different tax rules and may have limited or no access to franking credits.
- Taxable income requirement: To fully benefit from franking credits, the shareholder must have taxable income against which the franking credits can be offset. If the shareholder’s taxable income is zero or the tax payable is lower than the franking credits, the excess credits may result in a tax refund or be carried forward to offset future tax liabilities.
- Qualifying dividends: Franking credits are attached to dividends that are fully or partially franked. A fully franked dividend means that the company has paid tax at the full corporate tax rate on the profits from which the dividend is paid. Partially franked dividends indicate that the company has paid tax at a rate lower than the full corporate tax rate.
- Exemptions and special cases: There may be specific exemptions or special rules that apply to certain categories of shareholders, such as individuals receiving government pensions or allowances. These exemptions may allow for cash refunds of excess franking credits even if the shareholder has no taxable income.
It’s important to note that the availability and treatment of franking credits can be subject to changes in tax laws and regulations. It’s recommended to consult a tax professional or refer to the guidelines provided by the Australian Taxation Office (ATO) for the most up-to-date information on eligibility and the application of franking credits.