A Franking credit allows companies in Australia to pass on tax paid at the company level to shareholders. The tax paid by the company is allocated to shareholders as franking credits attached to the dividends they receive.
It is also known as an imputation system and credit is refundable. This means that if no tax is payable, or if the franking credit amount is greater than the amount of tax calculated on your income, then the balance is payable to you as a refund.
If you receive franking credits on your dividends, you need to update us with the following information:
- Your franked amount
- Your franking credit
If you are an Australian resident, this information will be used for the following:
- To reduce your tax liability from all forms of income (not just dividends)
- To reduce your tax liability from your taxable net capital gain
- To refund any excess franking to you after any of your income tax and Medicare levy liabilities have been met.
Private Health Insurance Offset
The Private Health Insurance Offset also referred to as the Private Health Insurance Rebate, allows you a tax offset for a percentage of the premium you paid to a registered health insurer for a complying private health insurance policy. The percentage you can claim as an offset depends on the age of the oldest person the policy covers.
You can claim the Private Health Insurance Offset as a:
- Reduction in your private health insurance premium through your tax return
- Cash or cheque rebate from Medicare
- A refundable tax offset at the end of the income year through your tax return
- A combination of the preceding options, one for a different period of the year
The Medicare Levy, typically calculated at 2% of your taxable income, is the amount paid by Australian taxpayers that partially funds Medicare access for residents. It is reduced accordingly when your taxable income falls below a certain threshold. In some cases, you are exempt from paying the Medicare levy at all.
In the 2017-2018 financial year you are:
- Not required to pay the Medicare levy if your taxable income is less than or equal to $21,980 ($34, 758 for seniors and pensioners)
- Required to pay only part of the Medicare levy if your taxable income is between $21,980 and $27,475 ($34,758 and $43,447 for seniors and pensioners)
- Must pay the full Medicare levy amount if your taxable income is above $26,668 ($42,172 for seniors and pensioners)
If your taxable income is more than $27,476 ($43,448 for seniors and pensioners), you could still qualify for a Medicare levy reduction. This is dependent on your family taxable income, which consists of:
- The combined taxable income of you and your spouse, OR
- Your taxable income if you were a sole parent for the year
Student Financial Supplement Scheme
SFSS, also known as the Student Financial Supplement Scheme, was a voluntary loan program designed to help tertiary students cover their expenses while studying.
Loan repayments do not commence until five years after the loan was taken out by the student AND only when income reaches a certain level (listed in tables below). This loan program ended in December of 2003.
Your repayment income consists of your taxable income plus any of the following:
- Total net investment loss
- Total reportable fringe benefits
- Reportable superannuation contributions
- Exempt foreign employment income
2017-2018 repayment income thresholds and rates:
2016-2017 repayment income thresholds and rates:
2015-2016 repayment income thresholds and rates:
2014-2015 repayment income thresholds and rates:
For more information, please visit the Australian Government Student Assist website.
Medicare Levy Surcharge Exemption
Every Australian resident has to pay a Medicare Levy of 2% of their taxable income. On top of this, you may also pay the Medicare Levy Surcharge (MLS), which amounts to 1%, 1.25% or 1.5% of:
- Your taxable income
- Your total reportable fringe benefits, and
- Any amount on which family trust distribution has been paid
You may be exempt from the Medicare Levy Surcharge if your income was below certain levels. If your income was less than $90,000 and you were single without a dependent child or less than $180,000 in most other situations, you probably will not have to pay the MLS.
Below are the income thresholds and Medicare Levy Surcharge rates for 2014-2015, 2015-2016 and 2017-2018: