Make sure you claim your franking credits

Font size :

 

If you hold shares on the ASX and haven’t heard of franking credits, chances are you’re entitled to some extra cash from the ATO. 
 
What are franking credits?
 
In Australia, each company is legally obligated to pay a tax rate of 30%. The dividends received by Australian shareholders are taxed under a system called “imputation”. 
 
This means that once companies have paid the 30% tax on their profit, the after-tax profit is distributed to shareholders through dividends. The idea behind the imputation system is to prevent shareholders from paying tax on the same income that’s already been taxed in the hands of the company – that is, avoiding double taxation. 
 
The tax paid by companies is attached to the dividends received by shareholders – this is the franking credits. It’s important to recognise that dividends are not all franked to the same degree. 
 
A fully-franked dividend has the maximum amount of franking credits attached, which is shareholders receiving a $0.30 refund for every $0.70 of a dividend.
 
Partially-franked dividends have less franking credits attached to each dollar of a dividend.
 
Unfranked dividends have no franking credits, meaning shareholders can’t make a claim.
 
How do you claim franking credits?
 
Since franking credits are clearly a wonderful thing for Aussie investors, you should make a claim for them.
 
Shareholders need to find their Share Dividend Statements and complete a form from the Australian Taxation Office (ATO) known as the ‘Application for refund of franking credits for individuals’. This form can be downloaded from the ATO website. 
 
Alternatively, you can make your claim with the ATO over the phone. 
 
Remember that you’re entitled to claim franking credits as far back as 2001 – so hop to it!
 
-- By Stephanie Hanna

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Friday, Sep 22, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords