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Effect on tax payable

Last updated 11 January 2005

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.

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.


Unfranked dividend received


Franked dividend received


Franking credit - non-cash


Other assessable income


Total taxable income


Tax on $41,200 - assessed at 2003-04 rates


less franking tax offset


Tax payable



End of example