• How dividends are taxed


    This section explains the taxation implications for resident shareholders. If you are a non-resident, read the section Dividends paid or credited by non-resident shareholders to see how the dividends you receive will be taxed.

    Dividends paid to shareholders by Australian resident companies are taxed under a system known as imputation. It is called an imputation system because the tax paid by a company may be imputed or attributed to the shareholders. The tax paid by the company is allocated to shareholders by way of franking credits attached to the dividends they receive.


    Franked dividends




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    A resident company, or a New Zealand company that has elected to join the Australian imputation system, may pay or credit you with a franked dividend. Franked dividends can be either fully franked - meaning that the whole dividend carries a franking credit - or partly franked - meaning that only part of the dividend carries a franking credit.

    Unfranked dividends


    Last modified: 12 Jan 2005QC 27523