Your franking tax offset

If you are paid or credited fully or partly franked dividends, or non-share dividends - that is, they carry franking credits for which you are entitled to claim franking tax offsets - your assessable income includes both the amount of the dividends you were paid or credited and the amount of franking credits attached to the dividends. You must include both amounts when you lodge your tax return - tax is payable at your applicable tax rate on these amounts.

If the franking credit is included in your assessable income at U item 11, you are then entitled to a franking tax offset equal to the amount included in your income. It is not necessary for you to claim the offset. It will appear on your assessment notice.

The franking tax offset can be used to reduce your tax liability from all forms of income, not just dividends, and from taxable net capital gains. The John Citizen example under the heading Effect on tax payable shows you how this works.

Prior to 1 July 2000 your franking tax offset could not create a refund. If you had any remaining franking tax offset available after your tax liability had been reduced to zero, they were disregarded and could not be refunded. However, from 1 July 2000, excess franking tax offset is refunded to eligible resident individuals after any income tax and Medicare levy liabilities have been met.




Tax payable on taxable income


less other tax offsets


Net tax payable


plus Medicare levy




less franking tax offset


Refund (of excess franking credits)


(Amounts are for illustrative purposes only.)

Claiming your franking tax offset when you do not need to lodge a tax return



This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

If you are eligible to claim a franking tax offset for 2003-04 but you are not otherwise required to lodge a tax return, you should read the publication Refund of franking credits instructions and application for individuals. If you need further information, please phone the Personal Tax Infoline on 13 28 61.

Last modified: 12 Jan 2005QC 27523