Franked distributions & capital raisings – 16 March 2023

The Government introduced Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 on 16 February 2023 which deals with, inter alia, off-market share buy-backs and franked distributions funded by capital raisings.

This Tax Insights addresses the measure relating to franked distributions and capital raisings. Where the measure applies to post 15 September 2022 distributions, the relevant distribution will be unfrankable, which will result in higher than expected tax liabilities in the hands of the shareholders. An unfrankable dividend does not result in a tax offset for resident shareholders, will be subject to dividend withholding tax for non-resident shareholders and cannot be declared to be conduit foreign income.