General Information on Dividends
If the trust is a shareholder or holder of a non-share equity interest in a company (including a listed investment company), or held units in a corporate unit trust or a public trading trust, the company, corporate unit trust or public trading trust gives the partnership or trust a statement of dividends or non-share dividends. This statement includes:
The name of the entity making the distribution
The date on which the distribution was made
The amount of the distribution
The amount of franking credit allocated to the distribution
The franking percentage for the distribution
The amount of any withholding tax that has been deducted from the distribution
The name of the shareholder
If the distribution is unfranked, a statement to that effect, and
If the distribution is franked, the franked amount and the unfranked amount of the distribution.
For income years starting on or after 1 July 2016, some trusts that were corporate unit trusts or public trading trusts will no longer be taxed similarly to companies, and distributions from those trusts will not be treated as dividends. However, some distributions may be treated as dividends until 30 June 2019. You should refer to any distribution statement from the trust.
If a franked distribution has been received with an associated Statement of distribution that does not distinguish between the franked and unfranked portions of the dividend, include the total dividend amount at label L Franked amount and include any attached franking credits at label M Franking credit.
Show only amounts received directly from Australian companies, corporate limited partnerships, corporate unit trusts and public trading trusts. Show dividends that are part of a distribution from a managed investment fund or other trust or partnership at item 8 Partnerships and trusts. Show dividends received from foreign sources, including dividends from a New Zealand company with Australian franking credits attached at item 23 Other assessable foreign source income.
If the partnership or trust was paid a dividend by a listed investment company (LIC) and the dividend advice statement shows a LIC capital gain amount, the trust can claim a deduction of 50% of the LIC capital gain amount at item 16 Deductions relating to Australian investment income.
To the extent that family trust distribution tax (FTDT) has been paid on a dividend paid or credited to the partnership or trust by a company which has made an interposed entity election, the dividend is excluded from the assessable income of the trust under section 271-105 of Schedule 2F to the ITAA 1936. Do not show it at labels K or L. You cannot claim a deduction for any losses or outgoings incurred in deriving an amount which is excluded from assessable income under section 271-105 and you cannot claim a credit or tax offset for any franking credit attached to the non-assessable non-exempt portion of the dividend. Accordingly, do not include any amount at label M for a franking credit attached to the whole or part of a dividend that is non-assessable non-exempt under section 271-105. For more information about the circumstances in which FTDT tax is payable, refer to Family trust distribution tax on the ATO website.
If trustee beneficiary non-disclosure tax has been paid in respect of the dividend that is part of a share of net income to which the partnership or trust is presently entitled or which has been distributed to the partnership or trust, the dividend is not included in the assessable income of the partnership or trust.
You cannot claim a deduction for any losses or outgoings incurred in deriving the amounts which are excluded from assessable income and you cannot claim a tax offset for any franking credits attributable to that dividend.
For more information on dividends, franking credits and tax offset entitlement, refer to Appendix 1 in the ATO Trust return instructions.
Use the Dividend worksheet (div) to enter these amounts. Data entry permits dollars and cents for credit fields, the total being rounded on integration to the relevant label in the return. When a Franked amount is entered Tax will calculate the relevant Franking credit.
Show at label K the total unfranked dividends received or use the Dividend worksheet (div) to record details of all dividend transactions.
Even if the TOFA rules apply to the trust, show at label K all unfranked dividends paid or credited to it by Australian companies. This includes those paid in respect of financial arrangements subject to the TOFA rules.
Refer to Guide to the taxation of financial arrangements (TOFA) rules on the ATO website.
If the partnership or trust is a holder, or an associate of a holder, of a share or non-share equity interest in a private company and it received:
directly or indirectly payments or, loans forgiven by the company, or
loans or debts forgiven by a trustee, where the company has an unpaid present entitlement to income from the trust, or
payments from a trustee which are attributable to certain unrealised gains, where the company has an unpaid present entitlement to income from that trust
The amounts (subject to distributable surplus and in the case of a trust the unpaid present entitlement) of those payments, loans not repaid or debts forgiven are returned as an unfranked dividend unless they are specifically excluded under the provisions of Division 7A of Part III of the ITAA 1936, or the amount treated as a dividend is franked. Division 7A was amended to enable certain amounts treated as dividends to be franked. For example, a private company can frank an amount treated as a dividend that arises because of a family law obligation in certain circumstances. For the purpose of these rules a 'loan' has an extended meaning to also include, for example, the provision of financial accommodation and transactions which are in-substance loans.
Dividends paid under a demerger are generally not assessable dividends. Do not include a dividend paid under a demerger at label K unless the head entity of the demerger group has advised that it is an assessable dividend.
Show at label L the total of Franked dividends received grossed up to include the Franking credit or use the Dividend worksheet (div) to record details of all dividend transactions.
If you have received a franked distribution with an associated Statement of distribution that does not distinguish between the franked and unfranked portions of the dividend, include the total dividend amount at label L and include any attached franking credits at label M.
The beneficiaries or trustee may be entitled to a share of the franking credits shown at label M. This share will be shown at item 55 on the Statement of distribution The franking credits to which they will be entitled will depend on their individual entitlement to any franked dividends received by the trustee, having regard to the deed and any relevant trustee resolutions
Show at label M the total franking credit received directly from a paying company or use the Dividend worksheet (div) to record details of all dividend transactions and have the multiple entries totalled and integrated to label M.
The amount at M is distributed to the partners, beneficiaries or trustee and is allowed as a tax offset to reduce their tax payable.
Do not show:
- franking credits if the trustee did not satisfy the holding period rule and the related payments rule in relation to the dividend or if the dividend washing integrity rule applies; (refer to Appendix 1 in the ATO Trust return instructions.)
- franking credits received indirectly through another trust - show these amounts at D Share of franking credit from franked dividends item 8
- franking credits attached to distributions paid by a New Zealand franking company. If the trust received franked distributions from a New Zealand franking company, see 23 Other assessable foreign source income.
Show at label N the total amount withheld from Unfranked dividends less any refund of TFN amounts withheld or use the Dividend worksheet (div) to record details of all dividend transactions. TFN amounts withheld cannot exceed 50% of unfranked dividends.
Dividends received worksheet (div)
This worksheet is provided for dissection and record keeping. Refer to Gross dividends worksheet (div).
Fields are provided for:
|Name of company||Enter the name of the company from which the dividend was received.|
|Unfranked dividend||Enter the gross unfranked dividends received before any TFN amounts were deducted.|
|Franked dividend||Enter the amounts of franked dividends received.|
Tax will calculate the Franking credit from the Franked amount entered.
Once that field has been calculated, if it needs to be edited both the Franked Amount and the previously calculated Franking credit amount will need to be deleted before recalculation of the Franking credit can occur.
|TFN amounts||TFN amounts withheld cannot exceed 50% of unfranked dividends.|