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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 $700 and unfranked dividend of $200 from COALS TYER Ltd affect John's tax liability. It is assumed that John has other income of $40,000. Medicare levy is not included in the calculation.

    Example

    Unfranked dividend received

    $200

    Franked dividend received

    $700

    Imputation credit-non-cash

    $300

    Other taxable income

    $40,000

    Total assessable income

    $41,200

    Tax on $41 200-assessed at 2001-02 rates

    $8,740

    Less franking tax offset

    $300

    Tax payable

    $8,440

     

    End of example

    John'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 tax offset-to reduce the amount of tax that he has to pay.

    Last modified: 13 Dec 2019QC 27432