Franking Credits: Who Qualifies and What You Get
Learn how franking credits work to help you claim back tax already paid by Australian companies on your dividends.
Franking credits are a way to ensure you do not pay tax twice on the same income. They allow you to claim back the tax that an Australian company has already paid on the profits it distributes to you as dividends.
Who it's for
This is for individuals who are shareholders in Australian companies and receive dividends from them.
What you get
When a company pays you a dividend, they often include a credit representing the tax the company has already paid to the government. You can use these credits to reduce the amount of tax you owe on your own income, or potentially receive a refund if your personal tax rate is lower than the company's rate.
What it costs you
There is no direct financial cost to access this, but you must accurately report all your dividends and their associated credits in your annual tax return.
The catch to know
To claim these credits, you generally must meet specific ownership rules. Most notably, you must hold your shares for a minimum period of at least 45 days to be eligible.
How to apply
- Keep clear records of all dividend statements sent to you by your companies.
- Ensure you have held your shares for the required timeframe.
- Include all dividend income and franking credit amounts when you complete your annual tax return.
- Check the official portal for the current rates and specific reporting requirements.