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 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.
|
11 Dividends |
Unfranked amount |
S |
$200 |
|||||||||||
|
Franked amount |
T |
$700 |
||||||||||||
|
Franking credit |
U |
$300 |
||||||||||||
|
Tax file number amounts withheld from dividends |
V |
, |
. |
|||||||||||
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. Example 4 shows you how this works.
Before 1 July 2000 your franking tax offset could not create a refund. If you had any remaining franking tax offset amount available after your tax liability had been reduced to zero, it was disregarded and could not be refunded. However, from 1 July 2000 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
|
Tax payable on taxable income |
$2,000 |
|
less other tax offsets |
$1,500 |
|
Net tax payable |
$500 |
|
plus Medicare levy |
$200 |
|
$700 |
|
|
less franking tax offset |
$1,000 |
|
Refund (of excess franking credits) |
$300 |
Amounts are for illustrative purposes only.
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 2009-10 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 (NAT 4105). If you need further information phone the Individual Infoline on 13 28 61.