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Peter_Clyne(Superuser)Superuser
18 May 2023

My company tax return has been lodged and the company owes ATO a large amount of tax.

I've arranged a payment plan over coming months.

I also need to pay some franked dividends before 30 June.

What date/s does my company become entitled to franking credits for the taxes payable for 2021/2022 ?

Does my imaginary franking account record the credits when the income tax became due (15 May 2023), OR do small franking credits get recorded when each fortnightly payment is made according to the payment plan ?

Will anybody ever know the difference ?

Thanks for any answer/s, hopefully with reliable reference/s (because I searched and found none).

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Most helpful replyATO Certified Response

AriATO(Community Support)Community Support
ATO Certified Response23 May 2023

Hi Peter_Clyne


Sorry it's taken us longer than usual to reply. We wanted to check this with our technical team.


When an income tax debt is only partially paid, franking credits won’t arise for the outstanding liability.


In your situation, franking credits will be recorded in the franking account of your company when each fortnightly payment is made towards the liability, if:


  • The company is a franking entity
  • Residency requirements are met for the income year the tax is paid.

Each franking credit will generally be equal to the amount of tax paid.


You can check out franking credits and debits on our website for more information. There is also a table that sets out when franking credits arise in our legal database.

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Most helpful replyATO Certified Response

AriATO(Community Support)Community Support
ATO Certified Response23 May 2023

Hi Peter_Clyne


Sorry it's taken us longer than usual to reply. We wanted to check this with our technical team.


When an income tax debt is only partially paid, franking credits won’t arise for the outstanding liability.


In your situation, franking credits will be recorded in the franking account of your company when each fortnightly payment is made towards the liability, if:


  • The company is a franking entity
  • Residency requirements are met for the income year the tax is paid.

Each franking credit will generally be equal to the amount of tax paid.


You can check out franking credits and debits on our website for more information. There is also a table that sets out when franking credits arise in our legal database.

Peter_Clyne(Superuser)Superuser
25 May 2023

If my company borrows some money from me, or a bank, to pay the taxes, then the franking credits get created straight away.

If my company borrows the money from ATO under a payment plan, the franking credits get created each fortnight.

It all seems horribly inconsistent, and unnecessarily complicated.

@AriATO thanks anyway for taking trouble to reply.

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