The Assistant Treasurer, Senator Rod Kemp, announced today that the Income Tax Assessment Act 1936 will be amended, effective from 1 July 2002, to provide co-operatives with an option to frank dividend payments to members as an alternative to having these payments treated as deductions from the co-operative's assessable income.
The amendment will benefit shareholders of co-operatives with franking credits. Co-operatives generally have franking credits where they have elected to retain profits in order to expand the co-operative's business.
Shareholders in this instance will be able to receive recognition for the tax that has already been paid on co-operative income distributed to them.
Co-operatives who do not choose to frank dividends will continue to be able to treat dividend and rebate payments as deductions from the co-operative's assessable income.
In accordance with the Coalition Government's commitment to public consultation on taxation reforms, details of the measure will be developed in negotiation with the co-operative sector.
CANBERRA
27 August 2001
Michael Buckley, Treasury, (02) 6263 4413
Richard Wise, Assistant Treasurer's Office, (02) 6277 7360