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New to investing - confused about franking with DRP?

Discussion in 'General Investing Discussion' started by Hal, 16th Jul, 2018.

  1. Hal

    Hal New Member

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    Hi everyone, I have perhaps a stupid question.

    I started learning about investing several months ago and decided to buy some VAS. I received my first dividend statement in April, which because I participated in the DRP shows the amount plus how many shares were allocated.

    I'm now trying to collect my paperwork for doing tax and remembered that VAS has some franking credits, but this is not shown in my statement anywhere. I called Computershare and was told that because I participated in the DRP I don't get any franking credits. This doesn't make sense to me as I understand I need to declare the dividend as if I received cash anyway...

    So my question is, is it true that I don't get any franking credits since I participated in the DRP? Or if it's not true, where can I find how much was franked if it's not in my statement? Any help would be much appreciated!
     
  2. twisted strategies

    twisted strategies Well-Known Member

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    franking credits are PREPAID TAXES ( paid by the company )

    unless there has actually been a change of ( tax) law , you are still eligible to claim the credits when filing your tax return
    ( Shorten is trying to stop cash refunds of those credits , but if you are liable to pay some tax the credits should be a valid deduction )

    PS i would get that advice from Vanguard in writing and THEN query the ATO as to if there has been a special agreement reached .
     
  3. Hodor

    Hodor Well-Known Member

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    DRP works as if you received the dividend and then purchased the shares.

    You need to pay income tax on this income, any relevant franking credits will be taken into consideration come tax time.
     
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  4. Hal

    Hal New Member

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    Thanks both, I'll try contacting Vanguard as well.
     
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  5. twisted strategies

    twisted strategies Well-Known Member

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    of course i did make one assumption where if incorrect may change the game ..

    we are talking about the retail ETF and not the institutional fund ( which is similar but not exactly the same ) aren't we ???
     
  6. Hal

    Hal New Member

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    Yes I'm talking about the retail ETF :)
     
  7. twisted strategies

    twisted strategies Well-Known Member

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    thanks , just checking ... every now and then i make a completely wrong guess

    your original post doesn't follow normal practice of franking credits when the divs are DRPed

    ( normally there is an amount for you to claim on your tax form )
     
  8. twisted strategies

    twisted strategies Well-Known Member

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    from Bell Direct

    for VAS


    Balance Date
    Dividend Type Cents per share Ccy Franked % Ex-Dividend Date Books Close Date Pay Date
    30/06/2018 Final 101.730 AUD 0.00 02/07/2018 03/07/2018 17/07/2018
    31/03/2018 Interim 66.530 AUD 76.00 03/04/2018 04/04/2018 18/04/2018
    31/12/2017 Interim 68.100 AUD 84.00 02/01/2018 03/01/2018 17/01/2018
    30/09/2017 Interim 100.880 AUD 86.00 02/10/2017 03/10/2017 17/10/2017
    30/06/2017 Final 45.290 AUD 0.00 03/07/2017 04/07/2017 18/07/2017
    31/03/2017 Interim 54.030 AUD 78.00 03/04/2017 04/04/2017 20/04/2017
    31/12/2016 Interim 92.780 AUD 91.00 03/01/2017 04/01/2017 18/01/2017
    30/09/2016 Interim 102.010 AUD 63.00 04/10/2016 05/10/2016 19/10/2016
    30/06/2016 Final 19.560 AUD 0.00 01/07/2016 04/07/2016 18/07/2016
    31/03/2016 Interim 84.670 AUD 56.00 01/04/2016 04/04/2016 18/04/2016

    it seems no franking was paid on the last div. ( to anybody )

    for VHY the same so maybe it is a new policy

    VHY VNGD AUS HIGH YIELD ETF UNITS


    Balance Date Dividend Type Cents per share Ccy Franked % Ex-Dividend Date Books Close Date Pay Date
    30/06/2018 Final 178.900 AUD 0.00 02/07/2018 03/07/2018 17/07/2018
    31/03/2018 Interim 97.860 AUD 60.00 03/04/2018 04/04/2018 18/04/2018
    31/12/2017 Interim 66.630 AUD 89.00 02/01/2018 03/01/2018 17/01/2018
    30/09/2017 Interim 129.860 AUD 93.00 02/10/2017 03/10/2017 17/10/2017
    30/06/2017 Final 168.780 AUD 0.00 03/07/2017 04/07/2017 18/07/2017
    31/03/2017 Interim 55.000 AUD 20.00 03/04/2017 04/04/2017 20/04/2017
    31/12/2016 Interim 112.120 AUD 67.00 03/01/2017 04/01/2017 18/01/2017
    30/09/2016 Interim 112.180 AUD 87.00 04/10/2016 05/10/2016 19/10/2016
    30/06/2016 Final 82.330 AUD 0.00 01/07/2016 04/07/2016 18/07/2016
    31/03/2016 Interim 43.380 AUD 76.00 01/04/2016 04/04/2016 18/04/2016
     
  9. Hal

    Hal New Member

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    Wow thank you. Hmm so based on the above it looks like all previous June dividends had zero franking, if I am looking at the right numbers. That still leaves my April statement in mystery.
     
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  10. twisted strategies

    twisted strategies Well-Known Member

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    indeed no franking credits ( on your documentation ) for the April payment , does conflict with advice given elsewhere ( and is counter-intuitive )

    have a talk to Vanguard and see what they say ( maybe there has been a stuff-up )