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The Dividends received worksheet provides for the details of one or more dividend received transactions to be recorded.

Transactions in the worksheet

To add transactions click [Ctrl+Insert]. To delete transactions click [Ctrl+Del].

For each transaction the following information is recorded:

FieldDescription
Company NameThis identifies the Australian entity paying the dividend. To add entries to the worksheet click [Ctrl+Insert].
Unfranked AmountThis is the amount on which Australian company tax has not been paid. It should be detailed on the dividend statement sent by the company or trust paying the dividend. The amounts entered are totalled and transferred on integration to the relevant label in the main return.
Franked Amount

This is the amount of the fully franked dividend received (grossed up to include any franking credits attached to it).

Franking credit

This is the total of franking credits attached to dividends that have been franked at the company tax rate of 30%. An amount equal to the franking credit will be automatically allowed as a tax offset to reduce any tax payable on the dividends and any other taxable income received.

As small business companies now have a higher franking credit cap than their tax rate, care needs to be taken not to over-frank by allocating more franking credits than are in the franking account when paying dividends. This could result in your having to pay a franking deficit tax.

The franking credit:

  • is allowed as a rebate to reduce the amount of tax payable

  • is limited to gross tax payable before Medicare

  • must be present for each franked dividend entered but cannot exceed 30% of the franked dividend amount

  • if an amount of franked dividends is present, then a franking credit must also be present

The Franking Credit calculated from the Franked amount can be overwritten. If the calculated Franking Credit is changed then any further alteration to the Franked Amount will not be reflected in the Franking Credit. Under these circumstances to have Tax recalculate the Franking Credit you should delete both Franked Amount and Franking Credit then enter the Franked Amount as required.

From 1 July 2016 further amendments to the corporate tax rate have been approved:
The aggregated turnover of a company and its known associates and affiliates has been increased from $2 million to $10 million and the tax rate for small business entities reduced from 28.5% to 27.5%.
For companies that are not small business entities, the corporate tax rate remains unchanged at 30%.

TFN withholdingThis is the amount of tax withheld where the taxpayer has failed to quote a tax file number (TFN). The amount withheld should be detailed on the Dividend statement received. This amount cannot exceed 48.5% of the Unfranked amount.
Share account?

Entering Y at this field will open the Index of Joint owners. Details entered and recorded in this Index will be rolled over from year to year. See Creating the transaction for Share details below.

Joint OwnerJoint owner will only be displayed where Share is Y

Shared Income

Tax provides functionality to share such income and any Franking credits or TFN credits attached to it.

The taxpayer's share of the total amounts entered integrates to the Dividend labels in the main return.

Do NOT enter share of Distributions from Cash Management, Property and certain other unit Trusts in this worksheet. This income should be entered at Distributions from Partnerships and Trusts in the relevant return type.

The total amounts transfer to the relevant labels in the income tax return and are rounded on integration. TFN withheld is expressed as a dollar and cents amount in the main return.

All the amount fields accept cents. It is important to remember to key the decimal point, as otherwise the amount entered will be treated as whole dollars.

The franking credit is calculated from the Franked amount entered in the previous field. Once the Franking credit has been calculated by the system, if the Franked amount needs to be changed, then both the Franked amount and the Franking credit fields will need to be cleared, for the new calculation to proceed.

Creating the transaction for Share details

After entering Y at the Share account? field, the Index of Joint owners window appears. Perform the following steps to create the transaction for Share details:

  1. From within the Index of Joint owners window, click New. The Share details screen is displayed.

  2. In the General tab, Share to: field click [F10] or click on the ellipsis to open the Select Return Index.

  3. Select the return to receive the share.

  4. Enter the percentage share for that return.

  5. Press [F6] to save the entry.

  6. Click Cancel to return to the index if there are no other returns to share this amount.

To edit or delete the shared interest entries, refer to Index of Joint Owners

Distribution

When the Distribute button is selected the income and credits will be shared in accordance with the details and percentage entered in the Share details dialog and a corresponding dividend worksheet will be created in the Sharee's return.

Tax Pre-fill

Pre-fill this schedule using the Pre-fill Manager. The Pre-fill Manager enables you to download pre-fill reports for clients using the Practitioner Lodgment Service (PLS). You can view these reports in PDF format, and populate the pre-fill information into the client's Tax return.

Tax Pre-fill is dependant on available ATO data. Validate the Tax return by pressing [F3] for a list of the imported values and any errors before lodgment.

Non-residents withholding tax rate

For non-residents, click the ellipses [...] to select the Withholding Tax rate from the For non-residents select the withholding tax rate field.

 

Withholding Tax is the amount of tax withheld by financial institutions or companies issuing dividends to non-residents.

If applicable, select the relevant withholding rate. Although the rate can vary from country to country, the tax withheld on dividends is generally calculated at a rate of 30%.

The rate of tax selected is applied to the Unfranked Dividends for estimate calculation purposes only.

If the taxpayer was not an Australian resident for tax purposes for all or part of the year do NOT include income paid or credited during that period unless:

  • the dividend was fully franked, or
  • the dividend was not fully franked but withholding tax was (or should have been) withheld from the unfranked amount
Dividend Deductions

Type Y at the Quick access to Deductions field at this field and press [Enter] to open the Dividend Deductions (ddd).

Printing the worksheet

When the worksheet is printed, the Host return will show the details of the transaction and the details of the Share return: the Return Code and Name of the taxpayer the dividend income was shared to.

The Sharee's return will show the details of the transaction and the details of the Host return: the Return Code and Name of the taxpayer the dividend income was shared from.