What are franking credits?
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When you own shares or non-share equity interests in a company or invest in a managed fund, you may get dividend distributions.
Dividends paid to you by Australian companies and some New Zealand companies are taxed under a system known as imputation. The tax paid by the company is allocated (or imputed) to you by way of franking credits attached to the dividends you receive.
When are franking credits refunded to me?
If the franking credits you receive exceed the tax you have to pay you can claim this difference back as a tax refund. This is what is known as a refund of excess franking credits.
You may be entitled to a refund of the full amount of franking credits received, even if you don't normally lodge a tax return.
The Application for refund of franking credits for individuals 2004-05 is available for download.
Last modified: 01 Oct 2006QC 27601