Who must Lodge a Franking Account Tax Return?

Tax agent Melbourne suggests people complete a Franking account tax return 2022 for all Australian business tax entities and franking corporations in New Zealand that have:

  • A liability to pay Franking Deficit Tax (FDT)
  • A liability to pay Over-Franking Tax (OFT), or
  • Any significant difference in their benchmark franking percentage among franking periods must be reported to the Commissioner of Taxation.

The tax return is not compulsory for the trust that ceases to be a corporate unit trust or public trading trust as a result of the 2016 revisions eliminating Division 6B and modifying Division 6C. Accountants near me said that the trust’s transitional regulations allowable it to spend any surplus in its franking account for activities occurring prior to 1st July 2019 which are no longer in effect.

If there is any notification or liability obligation, the entity is mandatory to accomplish section A and the remaining things on the Franking Account Tax Return that relates to the obligation or liability.

If there is no notification obligation or liability, it is not required to lodge the tax return.

An accountant near me said that the corporate tax entity is an entity used for the reasons for the Income Tax Assessment Act, 1997 (ITAA 1997) Part 3-6 at the exact time if:

  • The entity is an organisation at that time
  • A corporate limited partnership, or
  • A public trading trust

For the income year in which that time is take place.

An organization is a New Zealand franking organisation if the organisation:

  • Is a New Zealand resident organisation, and
  • Has chosen to participate in Australia’s imputation system.

The same imputation rules that apply to an Australian corporate tax entity also apply to a New Zealand franking firm.

Period Boxes Part-Year or Approved Substitute Period

Tax agent Melbourne said that an early or late balancing corporate tax company is one that has been granted permission by the commissioner to employ an income year that does not finish on June 30. These businesses are given an approved Substituted Accounting Periods (SAP) in lieu of the fiscal year that ends on June 30 (standard income year).

  • The income year of an early balancing corporate tax entity ends before June 30.
  • The income year of a late balancing corporate tax entity ends after June 30.

An accountant near me suggests filling in the period boxes at the top of the tax return with the time period for which this tax return is being filed if the entity:

  • Is an early balancing company tax entity
  • Is a late balancing company tax entity
  • In any New Zealand franking company case or it ceases the franking entity partially by its income year, while its election is revoked or cancelled to join the Australia imputation system partially through its income year.

If a late-balancing corporate tax entity has chosen to have its FDT liability calculated on a 30 June basis, the period boxes must be filled up with the dates 1 July 2021 to 30 June 2022 as suggested by the accounting services provider expert.

Late Balancing Corporate Tax Entities that Elect to have their FDT Liability Determined on 30 June

A late-balancing corporate tax entity may elect to have its FDT liability, if any, calculated on a 30 June basis rather than at the end of the fiscal year.

If a late-balancing corporate tax entity chooses this option and has a debit balance in its franking account on 30th June 2022, it must file a Franking account tax return 2022 on or before 31st July 2022, to account for the FDT liability.

It must additionally file a Franking account tax return within one month of the end of the income year if it is required to:

  • Account for any OFT liability
  • Inform any important variation of its benchmark franking percentage among franking periods.

If there is any OFT liability have to before the last date of the month without any delay by the end of the year suggested by accountants near me.

R&D Entities Entitled to the R&D Refundable Tax Offset

Under Division 355 of the ITAA 1997, a corporate tax entity that meets certain criteria may be entitled to the Research and Development (R&D) refundable tax offset. Special rules ensure that the amount of R&D tax offset remitted is not immediately clawed back if the entity becomes liable to franking deficit tax as a result of a debit that ordinarily occurs in an entity’s franking account when it receives an income tax refund. In the case of refundable R&D tax offset amounts, the franking debit that normally occurs when a refund of income tax is paid is effectively deferred (deferred franking debits).

Final Word

We hope that you are fully equipped with the knowledge needed for the franking account tax return and instructions for 2022. Reliable Melbourne Accountants provides professional accountants to individuals and businesses with better accounting services.

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