How to lodge share income on your Australian tax return

End of financial year is approaching, and if you own shares, you need to report several types of income on your tax return. Dividends, capital gains, and franking credits each go in different sections, and getting it wrong can mean paying too much tax or triggering an ATO audit.

This guide walks you through what you need to report, where it goes, and common mistakes to avoid.

Disclaimer: This article is for informational purposes only and does not constitute financial or tax advice. Tax rules change and individual circumstances vary. Consult a qualified tax professional for advice specific to your situation.

Types of share income you need to declare

As a share investor in Australia, you may need to report three types of income:

1. Dividends (franked and unfranked)
2. Capital gains from selling shares
3. Foreign income from overseas shares (including foreign withholding tax)

Each type has its own section on the tax return, and they are calculated differently.

Where it goes on your tax return

Dividends: Item 11

All dividends go at Item 11 on your tax return. You need to report:

• Unfranked dividends at label S
• Franked dividends at label T
• Franking credits at label U

Your dividend statements from each company or your broker will show these breakdowns. If you received a distribution from an ETF or managed fund, the fund will send you a tax statement (called an AMMA statement or attribution statement) that breaks down the components.

For a detailed explanation of how franking credits work, see our guide on franking credits explained.

Capital gains: Item 18

Capital gains and losses go at Item 18 (capital gains) in the supplementary section of your tax return. You will need to report:

• The total capital gains for the year
• The CGT discount applied (50% for shares held more than 12 months)
• Any capital losses carried forward from previous years

You can use our capital gains tax calculator to estimate your CGT before lodging.

Foreign income

If you hold shares in US companies, international ETFs that distribute foreign income, or other overseas investments, you may need to report foreign income and claim foreign income tax offset (FITO) credits.

Franking credits: how to claim them

Franking credits reduce your tax bill and can even result in a refund if your marginal tax rate is below the company tax rate.

Here is the basic process:

1. Gross up your dividend. Add the franking credit to the cash dividend received. For example, a $700 fully franked dividend from a company taxed at 30% has a $300 franking credit, making the grossed-up amount $1,000.
2. Include the grossed-up amount in your assessable income at Item 11.
3. Claim the franking credit as a tax offset. This directly reduces the tax you owe.

If the franking credit exceeds your tax liability (for example, if you earn under the tax-free threshold), you receive the excess as a cash refund.

For worked examples at different income levels, see franking credits explained.

Capital gains: the CGT discount

When you sell shares at a profit, the gain is added to your assessable income. However, if you held the shares for more than 12 months, you are eligible for the 50% CGT discount.

Example: You bought shares for $5,000 and sold them for $8,000 after holding for 18 months. Your capital gain is $3,000. After applying the 50% discount, the taxable gain is $1,500. This $1,500 is added to your income and taxed at your marginal rate.

Capital losses can be offset against capital gains in the same year. If your losses exceed your gains, the remaining loss is carried forward to future years. You cannot offset capital losses against other income like salary or dividends.

Use our CGT calculator to work out your capital gains and see the effect of the 50% discount.

Foreign shares and withholding tax

If you own US shares or US-listed ETFs, dividends from those investments are typically subject to 15% US withholding tax (assuming you have a W-8BEN form on file with your broker). Without a W-8BEN, the withholding rate is 30%.

You can claim the foreign tax paid as a foreign income tax offset (FITO) on your Australian tax return. This prevents you from being taxed twice on the same income. The FITO directly reduces your Australian tax liability, up to the amount of Australian tax that would otherwise be payable on that foreign income.

If you hold international ETFs on the ASX (like VGS, BGBL, or IWLD), the fund's tax statement will show any foreign income and foreign tax credits you can claim.

Common mistakes to avoid

Forgetting dividend reinvestment plans (DRPs). If your dividends are reinvested into additional shares through a DRP, the dividend is still assessable income in the year it was received. The reinvested amount becomes the cost base of the new shares.

Using the wrong cost base. Your cost base includes the purchase price plus brokerage. If you have received a return of capital distribution, your cost base is reduced by that amount. Getting this wrong affects your capital gains calculation.

Missing foreign income. Distributions from international ETFs often include foreign income components. Your tax statement from the fund will detail these amounts, and they need to be included in your return.

Not carrying forward capital losses. If you realised losses in a previous year and did not use them, they should be carried forward and applied against gains this year. Keep records of past losses.

Using a tax report to make it easy

Manually collecting dividend statements, calculating capital gains, and tracking franking credits across multiple brokers is time-consuming and error-prone.

A portfolio tracker like TrackMyShares can generate an EOFY tax report that summarises all your dividends (with franking credit breakdowns), capital gains (with the 50% CGT discount applied where eligible), and provides the numbers you need for each section of your tax return.

Start your free trial and generate your EOFY tax report before the deadline.