Franking Credits and How they are Paid
Do you know what franking credits are? Alternatively called Imputation Credits, these are a kind of tax credit that enables companies to forward tax paid (at company level) to the shareholders. Imputation credit is common in Australia. Its role is to lower the income tax paid on dividends. It can also be received as a tax refund.
How franking credits work
A corporation must pay tax on profits generated. The after tax income can be reinvested partly, or fully, back into the company or be paid out partly or fully to shareholders as dividends. A shareholder who receives a dividend is also qualified for franking credits at the Australian Tax Office. But their marginal tax rate will determine whether they need to pay the ATO some additional tax.
What is a grossed up dividend?
This sort of dividend means that imputation credits are also included. It is advisable to gross up dividends when comparing your returns.
Interested in joining our team? Why not apply today?
About Our Traineeships:-
Join the Market Leader in 2016 – Accounting Traineeships
Looking to study a B.Com at University of Newcastle in 2016?
Bottrell Business Consultants are a Multi Award Winning Firm
We have 2016 Traineeships available – work 3 days Study part-time 2 days
Apply now to Tara Skippen on tara@bottrellaccounting.com.au – send resume & cover letter
www.bottrellaccounting.com.au or check us out on Facebook, Twitter, Instagram or LinkedIn
Offices – East Maitland | Newcastle | Sydney | Melbourne | Brisbane | Gold Coast
Bottrell Business Consultants Pty Ltd – Chartered Accountants and Business Advisors.
The Bottrell group incorporates Bottrell Business Consultants, Bottrell Accounting & Taxation, Maitland Accounting & Taxation, East Maitland Accounting Services and Mobile Bookkeeping & Recruitment.
Our group of businesses & links include the following companies (& our websites);-
- Bottrell Accounting & Taxation – Visit out website
- Bottrel Business Consultants Pty Ltd – Visit our website
- Maitland Accounting & Taxation – Visit our website
- East Maitland Accounting Services – Visit our website
- Mobile Bookkeeping & Recruitment – Visit our website
Comments are closed.