How to claim franking credits in Australia

Working out how to claim franking credits in Australia comes down to three checks: your Australian tax residency, how you hold the investment, and whether you need to lodge a return. Expats often get stuck because those answers do not always match visa status or the first dividend notice.

Franking credits can reduce the Australian tax you owe and, in some cases, lead to a refund. If you are still getting used to the tax system in Australia, this guide explains the rules, the paperwork, and whether you need a tax return or the separate refund path.

This guide is for informational purposes only and is not legal, tax, investment, or financial product advice. Tax treatment depends on your circumstances and can change.

Key takeaways

• You can only claim if you were entitled to the dividend or distribution, have the right records, and meet the Australian Taxation Office (ATO) integrity rules.
• For expats, tax residency matters more than visa type. You can be a temporary visa holder and still be an Australian resident for tax purposes.
• The 45-day rule can apply when your total franking credit entitlement exceeds AUD 5,000 for the income year. A small shareholder exemption may apply at AUD 5,000 or less if the related payments rule does not apply.
• If you already lodge an Australian tax return, the claim normally goes through that return. If you do not need to lodge, you may be able to use the separate refund route.
• Get help from a registered tax agent if your case involves dual residency, treaty questions, trust complexity, or a move into or out of Australia during the year.

For a broader overview, read Expatica’s guide to the tax system in Australia.

How to claim franking credits step by step

If you already lodge an Australian tax return

If you already have to lodge a return, you usually claim through the return itself rather than making a separate refund application. The ATO’s myTax dividends instructions explain how to report franked amounts, unfranked amounts, franking credits, and TFN withholding.

Check each pre-filled entry against your own statements. Exchange-traded fund (ETF) or trust amounts may belong under managed funds or trusts instead of the dividends section.

For general filing requirements, see Expatica’s guide to filing your income tax in Australia.

If you do not need to lodge a tax return

For the 2025–26 income year, the separate refund application requires you to have been an Australian resident for tax purposes throughout the year and to meet the ATO’s other eligibility conditions, including the applicable dividend income limits.

During tax time 2026, some eligible individuals may receive an automatic refund of franking credits based on information reported to the ATO by share registries. Check the ATO’s current eligibility criteria before assuming you do not need to apply.

• Wait for pre-fill where possible, because most dividend data is usually loaded by late July.
• Use myGov and ATO online services if you want the clearest digital trail.
• If your circumstances changed during the year, check the ATO rules before using the no-return route.

What franking credits are and how they work

Australia uses a dividend imputation system. That means a company can attach a tax credit to a dividend to reflect company tax already paid, and an eligible investor can then use that credit as a tax offset.

Fully franked dividends carry the full attached credit. Partly franked dividends carry only part of it, while unfranked dividends carry none. Illustrative only: if a company earns AUD 100, pays AUD 30 in company tax, and distributes AUD 70, an eligible investor may receive AUD 70 in cash plus an AUD 30 franking credit, creating a grossed-up amount of AUD 100 for Australian tax purposes.

Who can claim franking credits in Australia

The ATO’s refund of franking credits for individuals guidance says a refund is only available if you receive franked dividends or franked distributions, your basic tax liability is lower than your available franking credits after other offsets, and you satisfy the integrity rules.

In practice, direct shareholders, and people who receive eligible franked amounts through a trust or partnership, may be in scope. Missing records, the wrong ownership path, or a failed integrity rule can block the claim. “Expat” is not an ATO tax category.

• You were entitled to the dividend or distribution, and your statement shows the franked amount and franking credit.
• You can identify whether the holding was direct, through a trust, or through a partnership.
• You are not relying on visa status alone to decide eligibility.

How tax residency changes the answer for expats

Australian tax residency, visa status, and citizenship are different things. The ATO’s tax residency guidance says you can be an Australian resident for tax purposes without being a citizen or permanent resident, and you can also hold a visa without being a tax resident.

A common question is whether non-residents can claim franking credits. Your tax status when the dividend was paid or credited can change whether the credit offsets Australian tax or can be refunded.

What changes if you hold investments through exchange-traded funds (ETFs), trusts or partnerships

When you hold Australian shares through an ETF, managed fund, trust, or partnership, the paperwork can look different from a direct company dividend statement. The first notice you see may only show the cash amount, not the final tax breakdown.

The ATO’s myTax guidance also separates direct company dividends from managed fund and trust distributions. If you are unsure how to report dividends in Australia, match the statement type to the ATO section you are using. Expatica’s guide to investing in ETFs in Australia explains that structure.

• Check whether you received a dividend statement or an annual tax statement.
• Confirm the franked amount, franking credit, and payment or distribution date.
• Verify whether the amount belongs in dividends, trusts, or managed funds when you lodge.

What you need before you claim

Before you open myGov or call an adviser, gather the paperwork first. That makes the claim a record check instead of a guess.

• Dividend statements or annual tax statements for the Australian income year, from 1 July to 30 June.
• The franked amount, unfranked amount, any partly franked amount, and the franking credit.
• Payment or distribution dates, especially if your residency changed during the year.
• Any TFN withholding amount shown on an unfranked or partly unfranked payment.
• Whether you are lodging a return, using the refund route, or becoming a foreign resident during the year.

Rules that can stop or reduce your claim

• Holding period rule: You may lose the offset if you did not hold the shares long enough while still exposed to the gain or loss.
• Related payments rule: You may fail the rules if you passed the benefit of the franked dividend to someone else.
• Wrong ownership path: ETF, trust, and partnership amounts can belong in a different ATO section from direct share dividends.
• Missing records: If your statements do not show the franked amount or franking credit, your claim becomes harder to support.

How the 45-day rule works

The 45-day rule is a holding period test. It asks whether you held the shares at risk for long enough, rather than buying only to capture the tax credit.

Under ATO guidance, ordinary shares usually need to be held at risk for at least 45 days and preference shares for 90 days, not counting the buy or sell day. Example: if you bought shares just before the ex-dividend date and sold them soon after, the cash dividend may still be yours, but the credit claim may fail. If your total direct and indirect franking credit entitlement for the income year is AUD 5,000 or less, you may qualify for the small shareholder exemption from the holding period rule, provided the related payments rule does not apply.

When related payments, trust rules or missing records matter

These issues often catch expats because the cash flow and the tax paperwork do not always match.

• A related payment is, in simple terms, an arrangement where you pass the benefit of the franked dividend to someone else.
• Trust and partnership holdings can involve extra entitlement rules, so the person receiving cash is not always the person entitled to the credit.
• If records are incomplete, or you changed residency mid-year, speak to a registered tax agent before you submit.

Common expat mistakes and how to avoid them

• Assuming expat means non-resident. Check the ATO residency tests first, because visa type alone does not answer the tax question.
• Using the wrong statement. For ETFs and trusts, wait for the annual tax statement instead of relying only on the cash distribution notice.
• Ignoring the 45-day issue. If you traded around the dividend date, check whether the holding period rule can affect your claim.
• Choosing the wrong ATO route. If you already lodge a return, claim there instead of using the standalone refund path.
• Forgetting home-country reporting. Franking credits can affect Australian tax, but they do not automatically solve cross-border reporting elsewhere.

Use a Wise Account to organize money across currencies

If you receive Australian dividend income in AUD but still pay bills or professional fees in another currency, a Wise account may help you keep those balances separate and move money internationally with clearer visibility over fees and exchange costs. That can make record-keeping simpler when you want to separate tax cash flow from everyday money.

Wise is not a broker, does not calculate or claim franking credits, and does not replace tax advice. It is simply one option for organizing cross-border money.

The bottom line

Check your tax residency, dividend records, ownership path, and the ATO integrity rules before claiming. Choose the tax-return route if you already lodge, or check whether the separate refund process applies. For cross-border dividend money, Wise Account may be useful for organizing currencies, but it does not claim tax credits or replace tax advice.

Sources

Expatica’s experts are all about providing the most up to date and accurate information. All guides are fact checked, and whenever we use external sources (like government websites or research papers) we’ll make a note of them here so you can check them out too.

1. Refund of franking credits for individuals, Australian Taxation Office
2. How to apply for a refund of franking credits, Australian Taxation Office
3. myTax instructions for dividends, Australian Taxation Office
4. Tax residency guidance for individuals, Australian Taxation Office
5. You and your shares, Australian Taxation Office
6. Tax Practitioners Board, Tax Practitioners Board