Dividend streaming

Should a franked dividend be repatriated to a resident shareholder, the potential application of the various dividend steaming provisions must be considered. While resident investors will generally benefit from the full amount of company tax (30 per cent) imputed on a franked distribution (subject to certain anti-avoidance provisions such as the 45-day rule), a non-resident investor may be entitled to only a proportion (e.g. 15 per cent) of the franking credits attached to a fully-franked dividend. Irrespective of the tax advantages of streaming franked dividends to resident investors, if dividends are not paid pari passu to all shareholders in an entity, the dividend streaming provisions may deny the franking credits to investors and/or debit the entity's franking account.