If a company fully franked a distribution during the year ending 30 June 2017 before the Treasury Laws Amendment (Enterprise Tax Plan) Act 2017 become law on 19 May 2017, the amount of the franking credit on the distribution statement provided to shareholders may be incorrect. This is because the franked distribution would likely be based on the 30% company tax rate, when the company’s tax rate for that income year may in fact be 27.5% because of the law change.
PCG 2017/D7 sets out a practical compliance approach that companies may choose to use to inform shareholders of the correct amount of franking credit attached to their distribution.
The approach may reduce compliance costs for companies by providing an alternative to seeking an exercise of the Commissioner’s discretion to allow amendment of distribution statements.
The Commissioner will not impose penalties on the company for giving a shareholder an incorrect distribution statement provided it gives written notice to each of its shareholder clearly sowing the correct amount of the franking credit. The notice should be provided in the same way as the distribution statement was provided (which may be electronically by email).