🇦🇺 Australia Dividend Tax Guide
Complete guide to dividend taxation in Australia. Franking Credits: You get credit for the 30% tax the company paid.
In 60 Seconds
- •Franking Credits: You get credit for the 30% tax the company paid
- •Imputation System: Prevents double taxation of corporate profits
- •Tax Offset: Franking credits reduce your tax bill dollar-for-dollar
- •Refundable: If credits > tax owed, the ATO refunds you cash
How Dividend Tax Works
Australia's imputation system attaches a "Franking Credit" to dividends, representing tax already paid by the company. You include this credit in your taxable income ("gross up"), calculate your tax, and then subtract the credit. It turns corporate tax paid into a personal tax prepayment.
Key Considerations
Example: Real World Scenario
Scenario
Received $700 fully franked dividend. Company paid $300 tax (30%).
Maximizing Franking Credits
Superannuation
Hold high-yield franked stocks in Super. Since Super earnings are taxed at 15% and credits are 30%, the fund receives a cash refund.
The 45-Day Rule
Be careful with short-term trading around dividend dates. You must hold the stock for at least 45 days (excluding purchase/sale day) to qualify for the credit.
Retirement Phase
For retirees in 0% tax phase, franking credits are 100% refunded as cash, boosting effective yield significantly.
