Private ruling: Franking credits
Date of advice: 2 February 2016
Published: March 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Question and answer | Are you entitled to claim the full amount of the franking credits? | Yes.

Relevant facts and circumstances: You are an Australian resident for tax purposes. You invested funds via a Managed Portfolio Service offered by a foreign investment advisory and management firm (the firm). The firm provides personalised advice in planning and investment strategy along with ongoing investment advice and complete portfolio administration. The funds you contributed to the Managed Portfolio Service were used to purchase shares and securities with various entities. The share purchases included those with Australian public companies. Under the Managed Portfolio Service, you are noted as the 'trading entity' and the firm carries out sales and purchases of shares and securities on your behalf. You received a Managed Portfolio Service summary as at 30 June 20XX which listed separately the holdings and income received from the various entities you purchased shares and securities with. The income you received from your investment portfolio included Australian franked dividends with franking credits attached.

Relevant legislative provisions: Income tax Assessment Act 1936 Section 44 | Income tax Assessment Act 1997 Division 202

Reasons for decision: Summary: The assessable income of an Australian resident shareholder in a company includes dividends that are paid to the shareholder by the company out of profits derived from it. A shareholder who receives a franked dividend from a company is entitled to a franking credit or tax offset for the tax paid by the company. In your case, shares in various Australian public companies were purchased on your behalf by an investment firm which manages your investment portfolio. You received franked dividends from the companies which had franking credits attached. From the information provided, the shares and securities were purchased in your name and any income or capital gains should be calculated and reported accordingly. Therefore, you are entitled to claim the full amount of the franking credits you received.