Franked Dividend

A franked dividend is a dividend paid by a company that has already paid tax on its profits. This means that the shareholder does not have to pay tax on the dividend again. The amount of tax that has been paid by the company is called the franking credit.

Franked dividends are often seen as a more tax-efficient way to receive dividends than unfranked dividends. This is because the shareholder does not have to pay tax on the dividend again, which can save them money.

However, it is important to note that franked dividends are not always the most tax-efficient way to receive dividends. In some cases, it may be more tax-efficient to receive an unfranked dividend and claim a tax refund.

The tax treatment of franked dividends can be complex, so it is important to speak to a financial advisor to get advice on the most tax-efficient way to receive dividends.

Here are some additional details about franked dividends:

* Franked dividends are paid out of after-tax profits. This means that the company has already paid tax on its profits, so the shareholder does not have to pay tax on the dividend again.
* The amount of tax that has been paid by the company is called the franking credit. The franking credit is attached to the dividend and is paid to the shareholder along with the dividend.
* The shareholder can use the franking credit to reduce their tax liability. The franking credit can be used to reduce the amount of tax that the shareholder owes on their other income, or it can be carried forward to future years.
* The tax treatment of franked dividends can be complex. It is important to speak to a financial advisor to get advice on the most tax-efficient way to receive dividends.

Here are some examples of franked dividends:

* A company that makes a profit of $100 pays $30 in tax. The company then pays a dividend of $70 to its shareholders. The dividend is franked with a franking credit of $30. The shareholders receive a dividend of $70 and a franking credit of $30.
* A company that makes a profit of $100 pays $30 in tax. The company then pays a dividend of $70 to its shareholders. The shareholders receive a dividend of $70 and a franking credit of $30. The shareholders use the franking credit to reduce their tax liability on their other income.

Franked dividends can be a tax-efficient way to receive dividends. However, it is important to speak to a financial advisor to get advice on the most tax-efficient way to receive dividends.