Franking credits explained
Understand how Australian franking credits (imputation credits) work, how to record them, and how they appear in your tax report.
Franking credits (also called imputation credits) are a feature of Australia's dividend tax system. They represent company tax already paid on the profits distributed as dividends, so you're not taxed twice on the same income.
How franking credits work
When an Australian company earns a profit, it pays 30% company tax. When it distributes the remaining profit as a dividend, it can attach franking credits to show that tax has already been paid.
As a shareholder, you include both the dividend and the franking credits in your taxable income, then claim the franking credits as a tax offset. If your personal tax rate is lower than 30%, you may receive a refund for the difference.
Example
BHP pays a $0.80 per share dividend, fully franked at the 30% company tax rate:
- Cash received: $0.80 per share
- Franking credit: $0.80 x (30% / 70%) = $0.3429 per share
- Assessable income: $0.80 + $0.3429 = $1.1429 per share
- Tax offset: $0.3429 per share
If you hold 1,000 shares:
- Cash received: $800.00
- Franking credits: $342.86
- Assessable income: $1,142.86
- Tax offset: $342.86
Franking levels
Not all dividends are franked to the same degree:
| Level | Meaning | Example |
|---|---|---|
| Fully franked | 100% of the dividend has franking credits attached | Most large ASX companies (BHP, CBA, CSL) |
| Partially franked | Only a portion has franking credits | Companies with some foreign income |
| Unfranked | No franking credits attached | Companies that haven't paid Australian company tax on that income |
Your broker statement will show the franking percentage and the dollar amount of credits for each dividend payment.
Recording franking credits in TrackMyShares
When you add a dividend transaction, the franking credits field appears automatically for Australian (ASX) stocks.
- Select Dividend as the transaction type
- Choose Australia (ASX) as the market
- Enter the shares you held at the ex-dividend date
- Enter the dividend per share from your broker statement
- Enter the franking credits as a dollar amount (not a percentage)
- Optionally enter any withholding tax if applicable
Tip: Your broker statement (Stake, CommSec, SelfWealth, etc.) shows the franking credits as a dollar amount. Enter that value directly.
Where to find franking credit amounts
| Broker | Where to find it |
|---|---|
| Stake | Dividend statement, "Franking Credits" column |
| CommSec | Activity > Dividends, "Franking Credit" field |
| SelfWealth | Transaction history, dividend details |
| Superhero | Activity > Income, franking credits shown per payment |
You can also import transactions from CSV with a "Franking Credits" column, and TrackMyShares will map it automatically.
Franking credits in your tax report
When you generate a tax report, franking credits appear in several places:
Dividend income section
- Gross dividends received shows the cash you received
- Franking credits (gross-up) adds the credits to calculate assessable income
- Assessable dividend income is the total (dividends + franking credits)
Tax offsets section
- Franking tax offset shows the total credits you can claim to reduce your tax
- Foreign income tax offset shows any withholding tax paid (separate from franking)
- Total tax offsets is the combined amount
Per-holding breakdown
The holdings table in the tax report shows franking credits per stock, so you can see which holdings contributed the most credits.
Franking credits and withholding tax
These are two different things:
| Franking credits | Withholding tax | |
|---|---|---|
| What | Australian company tax already paid | Tax withheld by a foreign government |
| When | Australian companies paying dividends | Foreign stocks paying dividends to non-residents |
| Example | BHP dividend to an Australian resident | Apple dividend to an Australian resident (15% US WHT) |
| Tax treatment | Claimed as a tax offset on your Australian return | Claimed as a foreign income tax offset |
Both can be recorded in TrackMyShares. Withholding tax appears for all markets, while franking credits only appear for Australian stocks.
Common questions
Do I need to enter franking credits manually?
You can enter them manually for individual dividends, but the easier approach is to export your annual income or dividend statement from your broker at tax time and import it as a CSV. The export will include franking credits for all dividends received during the year, and TrackMyShares maps the franking credits column automatically.
What if I don't enter franking credits?
Your tax report will still show your dividend income correctly, but the franking tax offset will be missing. This means your assessable income and tax offsets won't match what you need to report to the ATO.
Can I claim franking credits if I'm not an Australian tax resident?
Generally, no. Non-residents cannot claim franking credit refunds. However, franking credits can reduce withholding tax on dividends paid to non-residents. Consult a tax professional for your specific situation.
What's the company tax rate used for franking?
The standard rate is 30% for large companies. Small companies may use a 25% rate. Your broker statement will show the correct franking credit amount regardless of the rate.