.png)
A dividend landing in your account feels like free money. The ATO sees assessable income, but thanks to franking credits the real story is often better than it first looks.
Dividends are income
Every dividend you receive is assessable income in the year you receive it, whether you take it as cash or reinvest it. You declare it in your tax return alongside your salary and other income.
Franked versus unfranked dividends
Australian companies pay tax on their profits before distributing them. When they pass on a dividend from already-taxed profit, it comes franked, with a franking (imputation) credit attached for the tax already paid. Unfranked dividends carry no credit.
How franking credits work
You declare the grossed-up dividend, which is the cash you received plus the franking credit, and then use the credit against your own tax. Here is a fully franked example at the 30% company rate:
| Item | Amount |
|---|---|
| Cash dividend received | $700 |
| Franking credit attached | $300 |
| Grossed-up dividend declared as income | $1,000 |
| Franking credit used against your tax | $300 |
If your marginal rate is below 30%, the leftover franking credit can reduce tax on your other income or be refunded. If it is above 30%, you top up the difference.
Reinvested dividends still count
Dividend reinvestment plans do not change the tax. The dividend is still assessable income, and the new shares you receive start their own cost base for future capital gains.
Let Summ do the grossing-up
Franking credits, grossed-up amounts and reinvested parcels add up fast across a portfolio. Summ captures every dividend and franking credit and rolls them into a single ATO-ready report.
This article is general information only and does not take your personal circumstances into account. For advice specific to your situation, speak to a registered tax agent.
The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Summ (formerly Crypto Tax Calculator) disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.
.png)
.png)
.png)
