A share is a unit of ownership in a company. If a company has issued 100 million shares and you own one, you own one one-hundred-millionth of the business. You are entitled to vote at the annual general meeting and to receive a share of any dividends the directors declare.

How are shares actually bought on the ASX?

You open an account with a broker, transfer cash to it, and place an order. The order routes to the ASX or Cboe Australia order books, matches against a seller, and settles two business days later (T+2). After settlement the shares appear in your CHESS holding under a Holder Identification Number (HIN) tied to that broker.

Are franking credits the same as a tax refund?

Not quite. A franking credit is a credit for company tax already paid at 30 percent (or 25 percent for small companies). It is added to your taxable income and then subtracted from your tax liability. If the credit exceeds your liability, the excess is refunded for individuals. For someone on the 16 percent marginal rate, fully franked dividends commonly produce a refund.

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Shares, ETFs and investingUpdated 2026-05-01

Shares on the ASX, dividends and franking, in plain English

What a share is, how the Australian Securities Exchange (ASX) works, how dividends are paid, and what franking credits actually do at tax time for an Australian resident.

A share is a unit of ownership in a listed company. Owning a share entitles you to a slice of the company's future profits (paid as dividends), a vote at the annual general meeting, and a claim on the company's net assets if it is ever wound up.

In Australia, most listed shares trade on the Australian Securities Exchange (ASX). Some also trade on the smaller Cboe Australia venue. Your broker routes orders to whichever venue is showing the best price.

How the ASX works

The ASX runs an order-driven market. Buyers post bids, sellers post offers, and trades execute when the two meet. The market opens at 10:00 am Sydney time (with a staggered open between 10:00 and 10:09) and closes at 4:00 pm, with a closing auction at 4:10. Settlement is on a T+2 basis: if you buy on Monday, the trade settles on Wednesday and you legally own the shares from that date.

Three free figures the ASX publishes daily for every listed company are worth knowing about:

Last traded price: the most recent execution price.
Volume-weighted average price (VWAP): the average price across the day's trades, weighted by volume.
Market capitalisation: shares on issue times the last price, the rough market value of the whole business.

Dividends

A dividend is a cash payment from the company to its shareholders, declared by the directors out of after-tax profits. Most ASX-listed companies that pay dividends do so twice a year (an interim dividend with the half-year result and a final dividend with the full-year result).

Four dates matter for any dividend:

Announcement date: directors declare the dividend.
Ex-dividend date: the day the share starts trading without the right to receive the upcoming dividend. Buy on or after this date and you do not receive the payment.
Record date: the day the share registry takes a snapshot of who is on the register.
Payment date: the cash hits your nominated bank account.

The gap between the ex-dividend date and the payment date is typically four to six weeks.

Franking credits

Australia has an imputation system for company tax. When a company earns profit, it pays company tax at 30 percent (or 25 percent if it qualifies as a base-rate entity, which most small listed companies do not). When it then pays a dividend out of that taxed profit, it can attach a franking credit equal to the tax already paid.

For the shareholder:

The dividend is grossed up: your taxable income includes the cash received plus the franking credit.
The franking credit is then subtracted from your tax liability.
For Australian-resident individuals, any excess franking credit is refunded.

Worked example for a 16 percent marginal-rate earner who receives a $700 fully franked dividend:

\text{Franking credit} = 700 \times \frac{0.30}{1 - 0.30} = 300

\text{Grossed-up income} = 700 + 300 = 1{,}000

\text{Tax at 16 percent} = 160

\text{Net refund} = 300 - 160 = 140

The investor ends up with $700 cash plus a$ 140 refund at tax time, for a net of $840 on a$ 1,000 grossed-up dividend. That is why fully franked dividends are popular with low-marginal-rate investors and self-managed super funds in pension phase.

Not every dividend is fully franked. Companies with substantial foreign earnings (such as the big miners with offshore operations) often pay partially franked dividends. Companies that have not yet been profitable, or that pay out of capital, may pay unfranked dividends.

What you actually do at 18

Most school leavers do not have enough capital to make individual share picking worthwhile. The setup costs (an account, a brokerage fee per trade) eat a meaningful percentage of a small portfolio. The next two explainers in this hub cover the realistic options: ETFs and micro-investing apps.

If you do want to buy individual ASX shares, the practical steps are: open an account with an ASX-licensed broker, transfer funds, place a market or limit order, wait for T+2 settlement, and update your tax records on your annual return.

This is general explanatory information, not financial advice. For advice on whether shares suit your circumstances see a licensed financial adviser or the ASIC Moneysmart education pages.

Shares on the ASX, dividends and franking, in plain English

How the ASX works

Dividends

Franking credits

What you actually do at 18

Sources