Hi Miningnut. Assuming you live in Australia a franking credit...

Hi Miningnut. Assuming you live in Australia a franking credit represents a tax credit. When you do your tax return you add up all your taxable income from various sources. With dividends from shares, you add the dividend and the amount of the franking credit together, then add this to the rest of your income. When the tax office assesses how much tax you have to pay on your total income they calculate the total tax payable then deduct the value of the franking (tax) credit and any other credits such as pay as you go (PAYE), low income etc If the franking credit and other credits total more than the total tax assessed then you get a refund. If you have a superfund and you are over 60 and are retired and you take a pension from your fund which is then tax free, all your franking credits are returned to you upon lodging your return, by the tax office. Or, if you like, you are a pensioner of any sort and pay very little tax then you will get the appropriate refund sent to you. I am not an accountant or tax advisor and all this can be checked out on the www.ato.gov.au (tax office website.) Hope this helps E1