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  • Effect on tax payable

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    The following example shows how the fully franked dividend of $640 and unfranked dividend of $200 from O.P.Q. Ltd affects John Citizen's tax liability. It is assumed that John has other income of $40 000. Medicare levy is not included in the calculation.

    Example

    Label

    Amount ($)

    Unfranked dividend received

    200

    Franked dividend received

    640

    Imputation credit- non-cash

    360

    Other taxable income

    40,000

    Total assessable income

    41,200

    Tax on $41 200- assessed at 1999- 2000 rates

    10,318

    Less franking rebate

    360

    Tax payable

    9,958

    John Citizen's assessable income includes the imputation credit in addition to the franked and unfranked dividends, and John's tax is based on this higher figure. However, he is able to use the tax already paid at the company level-the franking rebate-to reduce the amount of tax that he has to pay.

    Question 10 Dividends
If you are a non-resident make sure you have printed your country of residence on page 1.
Label S Unfranked amount $200
Label T Franked amount $640
Label U Imputation credit $360
Label V Tax file number amounts deducted from dividends nil

    End of example
    Last modified: 23 Dec 2019QC 16138