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Australia Consulting on Integrity Measure to Prevent Distribution of Franking Credits Funded by Capital Raising — Orbitax Tax News & Alerts

The Australian Treasury has launched a public consultation on draft legislation for the introduction of an integrity measure to prevent the distribution of franking credits funded by capital raising. The deadline for comment is 5 October 2022

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Franked distributions and capital raising

As part of the 2016 17 Mid Year Economic and Fiscal Outlook, an integrity measure was announced to prevent the distribution of franking credits where a distribution to shareholders is funded by particular capital raising activities.

The Government has prepared exposure draft legislation giving effect to this measure, which will prevent companies from attaching franking credits to distributions to shareholders made outside or additional to the company's normal dividend cycle, to the extent the distributions are funded directly or indirectly by capital raising activities that result in the issue of new equity interests.

The Government is seeking stakeholders' views on the exposure draft legislation and accompanying explanatory material implementing this measure.