Australian resident individuals generally report dividend income as assessable income. For an eligible franked dividend, that means including both the cash dividend and its franking credit, then claiming an offset for the credit. An unfranked dividend has no franking credit. Whether you can claim a credit and how to enter each amount depend on your circumstances and the instructions for the relevant income year.
What franked and unfranked dividends mean
A company may pay a dividend that is fully franked, partly franked or unfranked. Your dividend statement shows the relevant dividend amounts and any attached franking credit. The Australian Taxation Office (ATO) explains that an unfranked dividend has no franking credit attached.
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A franking credit reflects tax the company has paid on its income. It is not simply ignored when you prepare your return: if you are entitled to claim it, you generally include the credit alongside the dividend in assessable income and then claim an offset for it. The ATO says a shareholder receiving a franked dividend may be entitled to an offset for tax the company paid on its income (ATO, You and your shares 2025).
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How the tax treatment works
| Dividend component | General treatment for an eligible Australian resident individual |
|---|---|
| Unfranked dividend | Include the dividend amount in assessable income. No franking credit is attached. |
| Franked dividend | Include the cash dividend and attached franking credit in assessable income, then claim an offset for the credit if entitled. |
| Partly franked dividend | Report the franked and unfranked portions separately, along with the applicable franking credit. |
The offset can reduce tax payable on income beyond the dividend itself. For eligible resident individuals, an excess offset may be refundable after relevant tax liabilities are taken into account. A refund is not automatic merely because a dividend is franked; entitlement and the overall tax calculation matter (ATO, franking credits guidance).
How to report dividends on your tax return
The ATO’s 2025 individual tax-return instructions direct taxpayers to total dividend components from their statements and other relevant dividend records. The instructions use separate labels for unfranked dividend amounts, franked dividend amounts and franking credits, and call for relevant TFN amounts withheld to be reported. Labels and requirements can change, so use the instructions for the income year you are lodging.
- Collect your records. Gather dividend statements and other relevant dividend information for the income year.
- Total each component separately. Add unfranked dividend amounts, franked dividend amounts and franking-credit amounts as applicable; also total relevant TFN amounts withheld.
- Check whether each credit is claimable. Do not include a franking credit as an available offset if a restriction prevents you from claiming it.
- Enter amounts at the applicable labels. Follow the current ATO instructions for the return year rather than relying on a prior year’s label names.
- Keep supporting records. Retain dividend statements with your tax records.
For the detailed 2025 labels and instructions, see the ATO individual tax return instructions 2025.
When a franking credit may not be claimable
A credit printed on a dividend statement does not by itself establish that you can claim it. The ATO’s shareholder guidance describes rules that can deny entitlement, including the holding-period rule, the related-payment rule and the dividend-washing integrity rule. The 2025 return instructions direct taxpayers to exclude credits where the relevant rules prevent a claim.
Holding-period rule
The ATO’s 2022 shareholder guide describes a general requirement to hold shares “at risk” continuously for at least 45 days, or 90 days for certain preference shares. The guide also describes an exception for an individual whose total franking-credit entitlement is below $5,000, subject to the related-payment condition. These details come from the 2022 guide; check current ATO material and your transaction facts before relying on them.
Related payments and dividend washing
Related payments and dividend-washing arrangements can independently affect whether a credit is available. These rules can depend on the timing and nature of transactions, so a statement alone may not provide enough information to determine entitlement. Check the current ATO instructions or seek advice from a registered tax agent if your holdings or transactions make the rules uncertain.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Resident and non-resident treatment is not interchangeable
The explanations here concern Australian resident individual shareholders. Non-residents have distinct tax considerations, and the general reporting steps above should not be applied to them without checking the rules that apply to their circumstances. Trust distributions, partnerships, companies, foreign dividends and unusual share transactions may also require separate analysis.
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