Not for profits: Have you claimed your franking credits?

If you are a not for profit organisation (NFP) and you receive franked dividends during the year, you may be able to get a refund of the franking credits.

Not sure what the franking credit system is?

Franking credits are attached to franked dividends, and companies can frank their dividends to the extent they have paid tax on the profits of the company.

The franking credit system basically allows a tax credit on income that has previously been taxed in the hands of a company and that is subsequently paid out to a shareholder. It ensures that the income is not taxed twice: once in the hands of the company, and once in the hands of the shareholder.

You can find out if any dividends you’ve received are franked by looking at your organisation’s dividend statement.

Your NFP is entitled to claim a tax credit for the franking credit provided it is one of the following:

• a charity or fund that has been endorsed by the ATO as exempt from income tax;
• a deductible gift recipient; or
• a developing country relief fund.

You must also have an ABN and be a resident of Australia for tax purposes.

The ATO has released a specific form for NFPs that want to claim the franking credit.

If you claimed a franking credit in the 2011 financial year, you should have received a personalised package from the ATO. If you did not receive one, or if you haven’t claimed a franking credit before, contact the ATO on 1300 130 248 for a copy of the package and the form.

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Tags: Not-for-Profits