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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

    Example 4 shows how the fully franked dividend of $700 and the unfranked dividend of $200 from Coals Tyer Ltd affect John’s tax liability. It is assumed that John has other income of $80,000. The Medicare levy is not included in the calculation.

    John’s assessable income includes the franking 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 on his assessment.

    Example 4: Tax payable on dividend income

    Unfranked dividend received

    $200

    Franked dividend received

    $700

    Franking credit, non-cash

    $300

    Other assessable income

    $80,000

    Total taxable income

    $81,200

    Tax on $81,200, assessed at 2013–14 rates

    $17,991

    less franking tax offset

    $300

    Tax payable

    $17,691

    Note: Tax payable does not include any liability for the Medicare levy.

    End of example
    Last modified: 24 Dec 2019QC 39802