Professional logo of National Accounts for financial services.
Work With Us

Dividend Resolution Template and Distribution Statements

Updated 8 September 2026

Generate the directors' minute declaring a dividend, with the three section 254T solvency declarations written out, plus a distribution statement for each shareholder. It checks the franking account first and tells you the largest dividend the balance can fully frank.

What this produces

A directors' resolution declaring a dividend, plus a distribution statement for each shareholder. Both are required. The statement is what lets the shareholder claim the franking credit, and a private company has to give it within four months of the end of the income year.

Declaring a dividend is also the usual way to clear a shareholder loan before it becomes a problem. If that is what you are doing, the set-off has to be documented and take effect by 30 June.

The company

The dividend

Shareholders

Your documents

'; var a=document.createElement('a'); a.href=URL.createObjectURL(new Blob(['\ufeff'+html],{type:'application/msword'})); a.download=(($('dv-co').value||'Company')+' Dividend Resolution').replace(/[^\w\s\-]/g,'')+'.doc'; document.body.appendChild(a);a.click();document.body.removeChild(a); setTimeout(function(){URL.revokeObjectURL(a.href)},1500); }); $('dv-print').addEventListener('click',function(){ var w=window.open('','_blank'); w.document.write('Dividend Resolution<'+'style>'+DOCCSS+'body{max-width:720px;margin:40px auto}@page{margin:20mm}'+docHTML+''); w.document.close();w.focus();setTimeout(function(){w.print()},350); }); })();

On this page

  1. The three tests in section 254T
  2. The distribution statement is the document that matters
  3. Franking to the account, not to the wish
  4. Partly franked dividends and the benchmark rule
  5. Setting a dividend against a Division 7A loan
  6. Dividend resolution FAQ

The three tests in section 254T

A company may pay a dividend only if all three conditions in section 254T of the Corporations Act are satisfied, and the directors have to turn their minds to each one:

  1. The company's assets exceed its liabilities immediately before the dividend is declared, and the excess is sufficient for the payment.
  2. The dividend is fair and reasonable to shareholders as a whole.
  3. The dividend does not materially prejudice the company's ability to pay its creditors.

The old profits test was replaced by these in 2010, so a dividend is no longer limited to accounting profits, but the solvency test is real and the directors are personally exposed if it is not met. The generator writes all three declarations into the minute rather than referring to the section, because a minute that just cites section 254T does not evidence that anyone considered it.

The distribution statement is the document that matters

The minute records the company's decision. The distribution statement is the document each shareholder needs in order to claim the franking credit, and it is the one that gets forgotten.

It has to show the amount of the dividend, the franked and unfranked portions, the franking credit, the franking percentage and the company's details. For a private company it is due to the shareholder within four months of the end of the income year in which the distribution is made.

The generator produces one per shareholder alongside the minute, because issuing the minute and forgetting the statements is the version of this that fails at the shareholder's return rather than at the company's.

Franking to the account, not to the wish

You cannot frank beyond the franking account balance. Doing so creates a franking deficit and franking deficit tax, which is payable and which also reduces the following year's franking capacity through the offset rules.

So the practical order is: check the balance, then size the dividend. At 30%, a $50,000 balance fully franks a cash dividend of $116,667 and no more. Where the balance is short, the generator tells you that maximum rather than simply refusing, so you can adjust the dividend instead of guessing.

i

Worked example. A company on 30% wants to pay $150,000 fully franked but has $50,000 in the franking account. Fully franking $150,000 would need $64,286 of credits. The options are a fully franked $116,667, or the full $150,000 partly franked, which engages the benchmark rule below. Size the dividend with the franking credit calculator before you draft the minute.

Partly franked dividends and the benchmark rule

The first frankable distribution in a franking period sets the benchmark franking percentage, and every other distribution in that period must be franked to the same percentage. For a private company the franking period is normally the income year.

The consequence is that you cannot frank one shareholder's dividend at 100% and another's at nil. Departing from the benchmark by more than a small margin triggers disclosure obligations and, in the wrong circumstances, franking credit denial under the streaming rules.

If different shareholders need different outcomes, the answer is usually different share classes established in advance, not different franking percentages after the fact.

Setting a dividend against a Division 7A loan

Declaring a dividend and setting it off against a shareholder loan is the standard way to deal with a loan heading for a minimum repayment shortfall. It works, and it does not require cash to move, but the sequence is unforgiving.

Work out the required repayment first with the Division 7A calculator. Declare a dividend at least equal to it. Make the set off effective on or before 30 June of the year the repayment is due, and record it in both the minute and the loan account. A resolution signed in August does not repair a shortfall for the year that closed in June.

!

The dividend is assessable to the shareholder in the year it is declared, so a set off that fixes a Division 7A problem creates an income tax liability in the same year. That is usually the better outcome than a deemed unfranked dividend, but it should be a decision rather than a surprise.

Provisions referenced: section 254T of the Corporations Act 2001, the three declarations; private company distribution statements due within four months of the end of the income year; benchmark franking percentage rules; franking deficit tax. Company franking rates of 25% for base rate entities and 30% otherwise. Verified 8 September 2026. Documents generated here are drafts to be settled by your adviser against the company's constitution and shareholder agreements.

Declaring before 30 June?

The minute is the easy part. Whether the company is solvent enough to declare, whether the franking account supports it, and whether the set off actually fixes the Division 7A position are the questions worth getting right first.

Talk to us

Or size the dividend and the credits first

Dividend resolution FAQ

Do we need a minute to pay a dividend?

Yes. The directors have to declare or determine the dividend and record that they were satisfied of the three matters in section 254T. Without a minute there is no evidence the solvency test was considered, which is a personal exposure for the directors rather than a company one.

Can a company pay a dividend if it has accumulated losses?

Possibly. The profits test was replaced in 2010 by the section 254T tests, so a dividend is not limited to retained earnings. What matters is that assets exceed liabilities with a sufficient excess, the dividend is fair and reasonable to shareholders as a whole, and creditors are not materially prejudiced. Accounting losses do not automatically prevent it, but they make the solvency question a real one.

What is a distribution statement and when is it due?

It is the statement given to each shareholder showing the dividend, the franked and unfranked portions, the franking credit and the franking percentage. It is what the shareholder relies on to claim the credit. For a private company it is due to the shareholder within four months of the end of the income year in which the distribution is made.

Can we frank one shareholder more than another?

No. The benchmark franking percentage set by the first frankable distribution in the period applies to all of them. Different outcomes for different shareholders are achieved through share classes set up in advance, not by varying the franking.

Can a dividend repay a Division 7A loan?

Yes, by set off, and it is the usual fix. Declare the dividend, apply it against the loan balance, and make the set off effective on or before 30 June of the year the minimum repayment is due. Record it in the minute and in the loan account. The dividend is assessable to the shareholder in that year.

What happens if we frank more than the franking account holds?

The account goes into deficit and franking deficit tax is payable. It is not a penalty as such, since it is broadly recovered as an offset later, but it accelerates the tax and it reduces next year's franking capacity. Sizing the dividend to the balance avoids it entirely.

General information only, prepared without regard to your objectives, financial situation or needs. It is not legal, financial product or taxation advice and should not be relied on as such. Documents generated here are drafts to be settled by your adviser. Liability limited by a scheme approved under Professional Standards Legislation.