Explanation of common terms
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What is dividend income?
If you own shares in a company, you will generally be paid your share of the company's profits as a dividend.
What is a franked dividend?
Franked dividends are payments made to shareholders or to holders of non-share equity interests on which the company has already paid tax.
What is a non-share equity interest?
From 1 July 2001, certain interests which are not shares are treated in a similar way to shares for tax law purposes. These interests are called 'non-share equity interests'.
What is an imputation credit?
An imputation credit is your share of tax paid by a company on the profits from which your dividends or distributions are paid. 'Imputation credit' can also be referred to as 'imputed tax credit', 'imputed credit', 'Class C imputation credit', 'imputation tax credit', 'Class C imputed credit', 'franking credit' or 'Australian imputed tax credit at the rate of 30 per cent'.
What is an unfranked dividend?
Unfranked dividends have had no Australian company tax paid on them before they are paid to shareholders or to holders of non-share equity interests. If the dividend is unfranked, there is no imputation credit.
What are tax file number (TFN) amounts withheld?
TFN amounts withheld are amounts withheld or deducted by the company or managed fund if you did not provide your TFN.
What is a dividend statement?
A dividend statement is sent to shareholders and to holders of non-share equity interests by companies to advise the dividend amounts and whether they are franked or unfranked, the amount of imputation credit and TFN amounts withheld (if any).
What is a distribution statement?
A distribution statement (also called a taxation statement) is sent to investors in managed funds or unit trusts. The statement may include unfranked dividends, franked dividends, tax file number amounts withheld and imputation credits.
Last modified: 16 May 2007QC 27397