If you’re an investor receiving dividends from Australian companies, you might be entitled to a refund of franking credits – and the good news is that you might not even need to apply for it.
If you don’t need to lodge a tax return the ATO may automatically refund your franking credits if you’re eligible. The automatic refund process: a game-changer for eligible investors.
During tax time 2025, the ATO automatically refunds franking credits to eligible individuals and issues a notice of assessment. If you meet specific criteria, you might receive your franking credits refund without lifting a finger.
Who qualifies for the automatic process?
To be eligible for an automatic refund of franking credits, you must meet all the following criteria:
- you’re over 60 years old on 30 June 2025
- you don’t have any capital gains tax
- the ATO has your current postal address on file
- you held the same parcel of shares for the last 2 income years
- you were a resident for tax purposes for the whole income year
- your total franking credit refund is not more than $5,460 y
- our total dividend income is not more than $18,200 and
- your basic tax liability is less than your franking credits after considering your eligibility for any other tax offsets
- you don’t have to lodge a tax return due to other income you’ve received
- you didn’t lodge a TFN employment declaration during the last 2 income years
- your super income stream total amounts don’t exceed $100,000
- you’re not a tax agent client
The ATO bases eligibility on your previous year’s information and data reported by banks, employers and others. Even if you received an automatic refund previously, your circumstances might change, affecting future eligibility.
When and how the automatic process works
Refunds are issued from mid-July, with most finalised by August. If you’re eligible, the ATO will send you a letter or SMS in mid-June detailing the process and timing. Your refund will be deposited directly into your nominated bank account. If you don’t want to receive an automatic refund, phone 13 28 65 (Fast Key Code 2, 2) to opt out. This won’t affect your eligibility for future years. Manual application options for non-eligible investors
If you don’t qualify for the automatic process, you have several options:
1. Online application (fastest option) Log into your myGov account, access ATO online services, select Tax > Lodgments > Refund of franking credits. Most dividend records are available by late July, so waiting until then ensures most information is pre-filled. Processing typically takes 2 weeks.
2. Phone application (quick and convenient) Complete the paper form Application for refund of franking credits for individuals first, then call 13 28 65. The automated system takes less than 7 minutes and processes applications within 2 weeks. This service operates 24/7, with quieter periods before midday, after 5 pm, or on weekends.
3. Postal application (traditional method) Complete and mail your Application for refund of franking credits for individuals to ATO, GPO Box 9845 in your capital city. Processing of postal applications takes up to 50 business days.
Important considerations
Keep your franking credit documents with your other financial records – you don’t need to send copies to the ATO when applying online or by phone. For investors with prior year franking credits, you can also apply online through the same ATO portal, selecting the relevant income year under the “Not lodged” tab. The automatic refund process represents a significant convenience for eligible retirees and investors, simplifying a once manual administrative task.
If you’re unsure about your personal or business situation and would like some support and guidance, please reach out.
Email reception@garnetaccounting.com.au or click to book an appointment below.