Dividends and franking credits
Australian dividend statements may show franked and unfranked dividends plus franking credits. Eligible credits are generally included in assessable income and applied as a tax offset.
Investment income is not always the same as the cash arriving in your bank account. This video explains the statements, tax components and transaction records ADF investors should bring to tax time.
The documents you receive can contain more than a single cash figure. The right treatment depends on the investment, the statement and your circumstances.
Australian dividend statements may show franked and unfranked dividends plus franking credits. Eligible credits are generally included in assessable income and applied as a tax offset.
Your annual tax or AMMA statement is a key reporting document. It may allocate distributions, capital gains, foreign income, credits and cost-base adjustments that are not obvious from cash received.
Selling or otherwise disposing of shares or ETF units can trigger a CGT event. Purchase price, sale proceeds, brokerage and relevant adjustments help determine the result.
Good records make the figures easier to verify and can prevent omissions when investments are held for many years.
Keep acquisition and disposal dates, quantities, prices, brokerage and corporate-action records. These details help establish capital proceeds and cost base.
Retain statements showing franked and unfranked amounts, franking credits and any tax withheld—not just the matching bank deposit.
Use the fund's reporting document for the income year. A cash distribution alone may not reveal every component that needs to be reported.
Keep notices about reinvested distributions, non-assessable amounts, splits and other events that may change the cost base of shares or units.
Not necessarily. Australian ETFs and managed funds can attribute several tax components to an investor. Use the annual tax or AMMA statement and your own records rather than relying only on bank deposits.
Dividend statements commonly show franked and unfranked amounts and any franking credits. Both the dividend and eligible franking credit may need to be included in the return, with the credit generally applied as a tax offset.
Keep purchase and sale contract notes, dates, amounts, brokerage and any documents affecting cost base. These records are used to calculate the capital gain or loss and support the amount reported.
The transcript has been lightly edited for punctuation, clarity and Australian spelling.
Many Australian Defence Force members invest in shares and ETFs, but one of the biggest mistakes we see is assuming only the money paid into your bank account matters at tax time. Investing is a great way to build wealth, but the Australian tax system requires careful reporting of every component of your portfolio. Whether you're holding long-term or trading frequently, understanding these rules is crucial before you lodge your return.
If you receive dividends from Australian companies, these generally need to be included in your tax return. Some dividends may also come with franking credits. These credits represent tax already paid by the company and can significantly affect your final tax calculation, potentially reducing the tax you owe.
If you invest in ETFs or managed funds, don't rely only on the cash you receive. Your annual tax statement is a key reporting document. These statements include distributions, capital gains and other tax components that the ATO requires you to report accurately.
Selling shares isn't just about the profit that hits your bank account. You may make a capital gain or loss based on the price difference. That's why keeping your original purchase records is so important. Without them, calculating your true tax liability becomes a major headache.
Some of the most common mistakes include forgetting dividend income, relying only on bank deposits or losing those vital purchase records. Even a small error can lead to an ATO audit or missed refunds. It's about getting the details right the first time.
The easiest way to avoid problems is to keep your contract notes, annual tax statements and dividend statements together throughout the year. Good records make tax time much simpler and ensure you're claiming everything you're entitled to as a Defence member.
At Defence Tax, we've specialised in helping current and former ADF members for more than 51 years. Our team is here to help you get it right.
General information only. Investment tax treatment depends on your circumstances, residency, investment structure and records. Consider personal tax advice before acting.