Franked distributions from trusts received at Item 8 of the Trust Tax Return already include attached franking credits, as per ATO instructions.
These credits represent tax paid by the company on profits before distribution through the trust, avoiding double taxation for beneficiaries.
Key Differences
Franked Distribution: The cash amount paid to the trust beneficiary (e.i., $70), which forms part of assessable income.
Franking Credit: The imputed tax credit (e.i., $30 at 30% rate) automatically included and reportable separately at Item 11, but not entered additionally at Item 8.
Do not add franking credits again to franked distributions, as this double-counts income and triggers ATO validation errors.
Entry Steps
- Enter only the franked distribution amount (cash received) at Item 8 > Partnerships and Trusts.
- LodgeiT auto-populates franking credits from ATO prefill or statements to Item 11 (Franking credits from franked distributions).
- Validate the return; credits flow to beneficiary statements correctly without manual gross-up.