Last Updated on 2020-07-13 by Admin
As dividends are paid after a company has paid it’s company tax, the dividend may contain a franking (imputation) credit.
If the dividend is fully franked (100%) investors are entitled to receive the full credit of the tax paid on the dividend as franking (imputation) credits.
Depending on an investors’ individual circumstances, franking credits may be used to decrease the income tax payable by the investor or potentially be received by the investor as a tax refund.
$$ Franking\;Credit = Franked\;Dividend \times \left (Company\;Tax\;Rate \over 1-Company\;Tax\;Rate \right ) $$
See also: Dividends
