It’s a bit like when your employer pays part of your pay to the ATO in anticipation of future tax. If the company distributes money they have already paid tax on you will have a dividend that is paid directly to you, plus an amount that has been paid in tax. Fully franked means the company has paid tax on the whole lot, partially franked means they only paid tax on a part of it. When you come to do your tax return the ATO will work out how much you actually owe (based on the tax rate for your income) and either ask for a bit more tax or refund the extra.
Does anyone here have any knowledge on share dividends and what it means to have it fully franked?
It’s a bit like when your employer pays part of your pay to the ATO in anticipation of future tax. If the company distributes money they have already paid tax on you will have a dividend that is paid directly to you, plus an amount that has been paid in tax. Fully franked means the company has paid tax on the whole lot, partially franked means they only paid tax on a part of it. When you come to do your tax return the ATO will work out how much you actually owe (based on the tax rate for your income) and either ask for a bit more tax or refund the extra.
no
prolly one of those things where wiki would be useful
here you go, easy as abc https://en.wikipedia.org/wiki/Australian_dividend_imputation_system
I still sort of don’t understand it.
Does the franking amount get added to a dividend payout?
Fully franked you get a credit for entire dividend amount and can offset your tax with that credit.
might help
Let’s say I have a dividend payout of 20cent and it’s 100% franked.
If it’s fully franked do I only get 20cents? or more than 20c?
You get (20c / (1-0.3)) -20c = A franking credit of about 8.5c
so you’re ending up getting 20c + 8.5c or 28.5c. It’s to avoid double taxation.
oh ok, I didn’t realise you get the franking credit as well.