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How to Claiming a Refund of Franking Credits

Updated: May 14

If you have purchased shares in an Australian resident company and the company pays dividends to their shareholders, you may be entitled to a franking (imputation) credit in your income tax return for the year or years that you received dividends with a franking credit attached. This will depend on whether the dividend is an unfranked dividend (there is no franking credit attached) or a franked dividend (a franking credit is attached). As a shareholder, you should receive a Dividend Statement from the company detailing the dividend amount, whether the shares are franked or unfranked and the amount of any franking credits. Shareholders are assessed on dividend payments and must declare their dividends in their assessable income in their income tax return in the financial year in which they actually received the dividend payments.

Example: If a Dividend Statement has a payment date of 31st of July, 2018 but the dividend was declared on the 30th of June 2018, the dividend and the franking credit will not be able to be declared until the 2019 income tax year.

The reasoning for this is that the company may declare the dividend on the 30th of June 2018 but may cancel or delay the payment to the shareholder. If you are not required to lodge a tax return, you can still claim a refund of your franking credits online, by telephone or by mail. To claim your franking credits online you need a MyGov account that has a link to the Australian Tax Office. If you would like to apply for a refund of your franking credits by post for the 2019 tax year you can download the form from the Australian Tax Office Website.

Prior year unclaimed franking credits

If you did not need to lodge a tax return in prior years but had dividends with franking credits attached but did not declare the dividends or claim the franking credits, you can download the form at: https://iorder.com.au/publication/searchpublications.aspx?txt=refund+of+franking+credits or you can contact the ATO Publications Distributions Service on 1300 720 092 during business hours.

Dividend Re-investment Schemes

If you did not receive a cash dividend but had a 'Dividend Reinvestment' arrangement in place, you still need to declare the receipt of the dividends 'in lieu' in your assessable income as well as the franking credits allocated. The franking credits can be claimed as a refund if your assessable income for the year including the dividends is under the taxable limit.

Reference: ATO website

Disclaimer: The contents of this information is general in nature and we accept no responsibility for persons acting on the information provided.

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