Question: In the Tax Return of an individual they received Franked Distributions from Trusts. Then, I recognised the franking credits to those distributions. It doesn't Gross up in the Taxable Income and only recognises the Franked Distributions from Trusts in Taxable Income. It does offset the Franking Credit in Tax Payable, but it should be including the amount from Franking Credits paid via Managed Funds as part of the Taxable Income.
Answer:
When you receive a distribution from a managed fund that includes franked dividends, the grossed-up amount — that is, the cash distribution plus the attached franking credit — should be included in your assessable income.
The franking credit itself is then claimed as a tax offset to reduce your tax liability.
In other words:
- Assessable income: Cash distribution + franking credit (grossed-up amount). Fill in Label 13C.
- Tax offset: Franking credit portion only. Fill in Label 13Q.
This ensures you correctly report income and claim the franking credit according to ATO rules.
ATO related link:
