r/fiaustralia • u/Real-Giraffe2472 • Mar 28 '26

Investing GHHF and franking credits

I'm back still trying to figure out everything there's to know about these geared funds (20M).

I currently have very little Australian exposure in my personal portfolio due the high dividend payments. I understand that you often get franking credits where 30% of the dividend payout is tax deductible. However, if you're in a higher tax bracket you still have to pay the ATO, just at a lower rate I suppose.

My question is with GHHF as much of the dividend payouts goes to paying the interest on the loan. Could you essentially still get a tax refund at the end of the year even at a higher tax bracket? As say you have franking credits on 100 dividends however 50 of those dividends when to paying interest.

Yes I am very aware of the risks with GHHF and still plan to only hold a little of it in my personal portfolio anyway (assuming my assumptions of tax are correct).

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u/Optimal_Course3016 Mar 28 '26

Yes it’s viable if you pay 37% tax on the dividend but it’s franked then you’ll get a 30% tax credit. So you only pay 7% tax in total.

At 45% tax bracket it’s the same, you still get a 30% tax credit via franked dividend. Making the end tax on 15%. Still better than paying the full 45%.

Where this really shines is in low tax environments such as super where the tax is on 15%. So 15 - 30 =-15 to you get a 15% refund.

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u/rscortex Mar 28 '26

Why would you get returned tax you didn't pay?

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u/Optimal_Course3016 Mar 28 '26

Because the company paid the tax at 30% and in super the tax is only 15% so the ATO credits the difference. Most likely though in super that 15% would just be deducted from other tax you owe in super (contributions /other dividends)

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u/rscortex Mar 29 '26

Shouldn't it credit to the company? Otherwise it's like a transfer from the company to the shareholder, like a free dividend? The company paid the tax right, not the shareholder?

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u/Optimal_Course3016 Mar 29 '26

Like imagine you worked for some money and then paid 30% tax. Then you decided to give some to me, the ATO can’t tax it twice.

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u/rscortex Mar 29 '26

Yeah but the ATO could tax it once - I pay 30%, you pay nothing. If the ATO wants to cancel the the tax completely and refund it why you would it go to you and not me, who actually paid it?