What is the Franking Credit?

Franking Credit

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’re 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
  • Refunding any excess franking to you after any of your income tax and Medicare levy liabilities have been met.

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