Blog

Money Doesn’t Come Without Guidance ...

HOW CAN AN INDIVIDUAL CLAIM REFUNDS FOR EXCESS FRANKING CREDITS? HOW HE/SHE IS ELIGIBLE FOR SUCH REFUNDS?

Awesome Image
24
May

You may be thinking about investing in the stock market in Australia but not sure about the tax implication of the earnings you receive as dividend. Australian Taxation Office (ATO) is encouraging investment in stock market by the means of franking credit; this is where tax payers get refund on tax imposed from their dividend income to avoid double taxation.

An individual can claim a tax refund if the franking credits he/she receives is more than the tax he/she has to pay. The difference amount is the one he/she can claim. This is called refund of excess franking credits. In some cases, an individual is entitled to a refund of the full amount of franking credits received, even if they do not lodge a tax return.

Individuals need to declare their unfranked amounts, franked amounts and franking credits in the tax return for individuals when they lodge the tax return. ATO then uses this information to work on the refund of excess franking credits. However, individuals can claim the refund without lodging the tax return, in this case they need to provide the necessary information by following these mediums:

  • Online;
  • Over the phone;
  • By lodging a paper form. Individuals are eligible for a refund of excess franking credits if all the following apply:
  • They receive franked dividends either directly or through a trust or partnership; 
  • Their basic tax liability is less than their franking credits after considering any other tax
  • offsets they are entitled to; 
  • They meet ATO’s anti-avoidance rules, which are designed to ensure everyone pays their fair share of tax.

For a dividend that has Australian franking credits attached from a New Zealand franking company, an individual may be eligible to claim the Australian sourced franking credits.


Comments 0

    Currently, there are no comment.

Login to comment

Latest Posts

Popular Post

We provide the fastest, easiest and most effective online tax return solution

trustedsite