As the end of the financial year approaches, it’s time for investors to start getting their tax affairs in order — and dividend income is a key area to get right. Whether invested in local blue-chip stocks or expanding your portfolio globally with US or Hong Kong shares, knowing how to report dividend income correctly to the ATO as tax time can make a big difference to your return and tax bill.
Here’s a breakdown of how to manage dividend reporting at tax time.
What are dividends?
Dividends are payments made by companies to shareholders from their net profits. The amount of dividends paid to holders is directly aligned with the percentage of shares owned by the shareholder.
In Australia, dividends are generally paid twice a year to align with a company's half-yearly reporting; however, some companies do pay quarterly, so it can depend on the company and sector. Shareholders can choose to get the payout in currency or reinvest the dividend. Various mutual funds and exchange-traded funds (ETFs) also pay out dividends.
In Australia, many companies pay franked dividends, which come with imputation credits that can reduce your tax payable.
Australian dividends: franked vs partially franked vs unfranked
Fully franked dividends
These are dividends where the company has already paid tax on the profits, and shareholders won't have to pay tax again. As an investor, you receive a franking credit representing the tax paid on your dividends, which in turn may reduce the amount of personal income tax that needs to be paid.
For example:
You receive a $700 fully franked dividend.
You’re also entitled to a $300 franking credit (based on the company tax rate of 30%).
The ATO sees this as $1,000 in taxable income.
You may receive a refund or offset depending on your marginal tax rate.
Partially franked dividends
These are, as the name suggests. With partially franked dividends, some tax has been paid on the dividend, but not all of it. So, a portion of the dividend is franked, and the other portion is unfranked. Investor statements will show this.
Unfranked dividends
These dividends don’t carry any tax credits, so the full dividend amount is taxable income.
How to report Australian dividends
The Australian Taxation Office (ATO) advises that investors must report all dividends to the ATO even if they are part of a reinvestment plan.
On your tax return, include:
Total dividends received
Franking credits
Any unfranked amounts
Any reinvested dividends
Your broker’s annual tax report or the company’s dividend statements will provide this breakdown.
Shares held in joint accounts:
These are treated as joint assets, and ownership is divided equally when assessing the income generated from the dividends. You can own shares in unequal portions in joint accounts; however, investors need to be able to show the contribution and distribution. This can generally be done by keeping a record of acquisition and cost.
International dividends: US and Hong Kong
Generally, non-resident countries ( i.e. Outside of Australia) have their own tax systems in place, and investors are subject to this when they invest in foreign companies. Therefore, Australian investors investing overseas won't be able to claim any franking credit on these investments.
According to the ATO, in certain circumstances, foreign dividends might be exempt from tax. For instance, investors may be exempt to avoid any double taxation, or exempt because the portfolio out of which the dividends have been paid has already been taxed at a comparable rate. There are special rules to check whether investors can claim a foreign tax offset, and generally, it's best to check with a financial advisor or accountant.
US dividends
Typically subject to 15% withholding tax (if you’ve filed a W-8BEN form).
The net dividend you receive is after tax has been deducted.
Just like ASX shares, US shares are subject to Australian capital gains tax (CGT). So, if shares are sold for a profit, you'll have to declare the proceeds for tax, the same way you would for your ASX shares.
You'll need to declare the gross amount (before withholding) as income.
You may be able to claim a foreign income tax offset.
Example:
A US company pays USD 100 in dividends.
You receive USD 85 after 15% withholding.
You declare USD 100 as income.
You may claim a USD 15 (converted to AUD) offset against your Australian tax.
Hong Kong dividends
Hong Kong does not impose withholding tax on dividends.
You need to report the full amount received as income.
No franking or offset applies.
How to report international dividends to the ATO
On your tax return:
Report the gross amount in AUD
Declare any foreign tax withheld (to claim as a credit)
Use exchange rates from the payment date or ATO-approved averages
Tips to make dividend reporting easier
Use your annual broker tax summary: most platforms issue EOFY reports showing dividend income, franking credits, and foreign income.
Tiger Trade has teamed up with Sharesight to make tax reporting even easier for our clients. Simply log in to your Tiger Trade account via the desktop and connect your account to Sharesight by following the prompts. Watch our webinar on connecting your Tiger Trade account to Sharesigh and how it can benefit tax reporting.
Alternatively, if you prefer not to connect to Sharesight, go to the Tiger Trade app > Portfolio > Statements > Customise > select your date range.
Keep all dividend statements: these are essential for cost-based adjustments and record-keeping in case of an audit.
Use an accountant or financial advisor: it's recommended that investors should seek professional financial advice from an accountant or financial advisor, particularly if you’re dealing with multiple markets or trust/ETF income.
Understanding how to correctly report dividend income — especially across Australian and international markets- ensures you're compliant and maximising your tax efficiency. Franking credits can boost your refund, and foreign tax offsets help avoid double taxation. Ensure you speak to a financial advisor or your accountant for any questions and advice related to your personal investing circumstances.
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