Your franking tax offset



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

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If you are paid or credited 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 tax offset. It will appear on your notice of assessment.

The franking tax offset can be used to reduce your tax liability from all forms of income (not just dividends), and from your taxable net capital gain. Example 4 shows you how this works.

Any excess franking tax offset amount is refunded to eligible resident individuals, after any income tax and Medicare levy liabilities have been met.

Example 5: Impact of franking tax offsets

John’s tax return (extract)


Tax payable on taxable income


less other tax offsets


Net tax payable


plus Medicate levy




less franking tax offset


Refund (of excess franking credits)


(Amounts are for illustrative purposes only.)

End of example

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

If you are eligible to claim a franking tax offset for 2014–15 but you are not otherwise required to lodge a tax return, read Refund of franking credits instructions and application for individuals 2015 (NAT 4105). If you need further information, phone 13 28 61.

Last modified: 29 May 2015QC 44180