Applying for a refund of Franking Credits.
If you didn’t have to lodge a tax return last financial year but had investment income that contained franking credits (income from shares), you should be eligible to apply for a refund.
What are franking credits?
‘Franked’ dividends are dividends paid by an Australian company out of profits it has already paid tax on. You’ll generally be entitled to a credit for the 30% company tax already paid if the dividend is ‘fully franked’. This credit is called an ‘imputation credit’ or ‘franking credit’. This means a $7 franked dividend is effectively worth the same as a $10 unfranked dividend. As you pay comparatively less tax on a franked dividend than with an unfranked dividend, shares that pay fully franked dividends can be ‘tax effective’ investments.
How do you claim franking credits?
To do so, simply call the ATO on 13 28 65. At the prompts, enter your tax file number (TFN), and then press 2.
Alternatively, download a form here and mail it to the ATO.
Remember that you’re entitled to claim franking credits as far back as 2001!