What are franking credits?
Franking credits — also called imputation credits — are a tax credit attached to dividends from Australian companies that have already paid company tax. They stop the same profit being taxed twice. When you receive a franked dividend you’re taxed on the dividend but credited for the tax the company already paid, and if your tax rate is below the company rate, the excess can be refunded.
By Justin Porrins, CFP® · SMSF Specialist Adviser™ · Last reviewed 25 June 2026
How they work
A company pays tax on its profits — 30%, or 25% for an eligible base rate entity — and passes a credit for that tax to shareholders with the dividend. You “gross up” the dividend by the credit, pay tax at your own rate, then offset the credit. A holder on a low rate, such as super in pension phase, can have the excess refunded.
Why they matter for structure
Who holds the shares — you personally, a trust, a company or an SMSF — changes how useful the credits are. The same dividend can be worth more or less after tax depending on the entity that receives it, which is why share ownership is a structuring decision, not just an investment one.
Common questions
Are franking credits refundable?
Yes. For eligible Australian residents, including complying super funds, franking credits that exceed your tax liability can be refunded — which is part of why franked dividends are valued by low-rate investors.
What is a fully franked dividend?
A fully franked dividend carries the full company-tax credit, because the company paid tax on all the profit behind it. A partly franked dividend carries a credit for only part of it.
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