You don't have credit card details available. You will be redirected to update payment method page. Click OK to continue.
If a dividend is paid without company tax having been paid already, would the recipient be able to declare the income and if not in a high enough tax bracket still pay no tax. Or if in the lowest bracket only pay 15% at most.
Talking about modest returns here. Would this not be the same result as having franking credits refunded?
A: Yes, if your income is less than $18,200 (the tax free threshold), no tax would be payable. If in the next tax bracket, pay tax at 19%.
No, it is not the same result as having franking credits refunded. Up to a tax rate of 30%, not only do you pay no tax on the dividend, but some or all of the franking credit will be available as an excess tax offset, which in some cases is refundable in cash.
Compare these two scenarios for a taxpayer paying tax at a marginal rate of 19%. Scenario 1 – an unfranked dividend of $70; scenario 2, a franked dividend of $70, which includes $30 in franking (imputation) credits.
Scenario 1:
Cash Dividend $70
Taxable Income $70
Tax @ 19% $13.30
Net income after tax: $56.70
Scenario 2:
Cash Dividend $70
Imputation Credit $30
Taxable Income: $100
Tax @ 19%: $19
Less imputation credit $30
Net tax payable: $11 (refund)
Net income: $81
