On a recent webinar, one of our attendees has asked, “Please define the term ‘franked dividend”
Here’s our answer –
If the company is earning $100,000 in profit, you will pay 26% of tax, and you’ve got $74,000 left in the bank account.
You can pay a dividend, and you can attach the $26,000 tax as a credit because you’ve already paid tax on that $74,000. We call it a franking credit to the dividend so that your shareholder isn’t taxed on the full amount again.
In the shareholders’ hands, they are not paying tax on the $100,000 without any credit because the company has already paid the tax for $26,000. So, it’s basically preventing you from paying tax twice on the profit.
Watch the full webinar, ‘Solving Company Loads Division/7A Problems ’ at https://learning.benwalker.com/courses/solvingcompanyloansD7AP
Select your desired option below to share a direct link to this page.
Your friends or family will thank you later.