# Franking credits



## fujitsu (24 October 2009)

I have a statement stating i received $264.42 in fully franked dividends at 30%. It also states i have $113.32 of franking credits.
Is that correct because 30% of 264.42 is 79.32.


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## So_Cynical (24 October 2009)

The dividend is made up of $264.42 after tax @ 30% and the tax (franking credit) of $113.32 so really the total dividend is more like 642.16 with tax payed at 30%


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## boofhead (24 October 2009)

$264.42 is what you get. That is the 70% after the 30% tax has been taken out. So $264.42 + $113.32 = $377.74 (what you would have got if there was no franking) or so. The registry service handling the company transactions should be able to verify it all.


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## awg (24 October 2009)

fujitsu said:


> I have a statement stating i received $264.42 in fully franked dividends at 30%. It also states i have $113.32 of franking credits.
> Is that correct because 30% of 264.42 is 79.32.




One thing to bear in mind, in case you are not already fully across this point.

If you are an Australian Resident, the Franking Credit can be a form of Tax Rebate, if your total effective marginal rate is below 30%.

You will be effectively refunded the difference in tax rates.

The ATO website explains how this is calculated, and other relevant details.


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## So_Cynical (24 October 2009)

So_Cynical said:


> The dividend is made up of $264.42 after tax @ 30% and the tax (franking credit) of $113.32 so really the total dividend is more like 642.16 with tax payed at 30%




My calculator is really crap


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## jono1887 (25 October 2009)

Just worked out my tax yesterday and was pleasantly surprised that my tax would be significantly reduced because of franking credits. Didn't realise this was how they worked before.. I just thought that as the company had already paid the tax, the dividend was tax free, but because I'm in the 15% tax bracket, its reducing my tax quite a bit..


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## Wysiwyg (25 October 2009)

jono1887 said:


> Just worked out my tax yesterday and was pleasantly surprised that my tax would be significantly reduced because of franking credits. Didn't realise this was how they worked before.. I just thought that as the company had already paid the tax, the dividend was tax free, but because I'm in the 15% tax bracket, its reducing my tax quite a bit..




Hello jono, Are franking credits deducted from taxable income (like a tax deduction) or are franking credits deducted from tax you have to pay (like rebates)?


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## So_Cynical (25 October 2009)

Wysiwyg said:


> Hello jono, Are franking credits deducted from taxable income (like a tax deduction) or are franking credits deducted from tax you have to pay (like rebates)?




There like tax u have already paid, so if u get tax back u get more and if u get a tax bill its less.


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## Wysiwyg (25 October 2009)

So_Cynical said:


> There like tax u have already paid, so if u get tax back u get more and if u get a tax bill its less.




Righto.


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## jono1887 (28 October 2009)

So_Cynical said:


> There like tax u have already paid, so if u get tax back u get more and if u get a tax bill its less.




yep, it is minused from your tax bill.. shouldn't we get interest on it though??


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## Judd (28 October 2009)

jono1887,

A quick couple of points.  Where you see a dividend as being fully franked divide it by 0.7 to get the gross amount.  Example company pays a 70 cent dividend fully franked.  Divided by 0.7 equals 100 cents grossed up.

Alternatively to calculate the imputation credit (the tax paid by the company on your behalf as a part owner) multiply the dividend by 3 and then divide by 7.  Example, $0.70 ff dividend * 3 = 210 / 7 = 30

The gross amount (100 cents as per example) is what you declare in your tax return and then the kind ATO gives you a credit (30 cents as per example) for the tax already paid.

And, no, why should you receive interest on funds you didn't actually receive in your bank account?


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## Julia (28 October 2009)

I might have missed someone pointing this out, but if you don't have tax to pay you will get a cheque for the franking amount from the ATO.
Many retirees get a quite decent amount in cash via this mechanism.


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## johenmo (24 January 2010)

So what is the before tax profit if QBE Div Statement says:
- 20% franked at 30% rate
- unfranked = $39.68
- Franked = $9.92
- Franking credit = $4.25
- Gross payment = $49.60

Can work out 39.68 + 9.92 = 49.60
Can work out $4.25 comes from ($9.92*30%/(100%-30%)

*BUT* if it is 80% unfranked, and this is = $39.68, shouldn't the 100% unfranked = $39.68*100/80? Which is $49.60!

Why wouldn't it be $39.68 + 9.92 + 4.25 = $53.85? Cause 20% of $53.85 = $10.77 and 30% tax on this = $3.23.

Is the statement's 20% franked at 30% wrong?  Or what am I not seeing?

If you can use these numbers to show me what I'm missing, it'd be appreciated.
Thanks
johenmo


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## freebird54 (19 March 2010)

I am with interactive brokers - A huge advantage is that I do not have to deal with about 4 letters a week from companies - they get all the rubbish/div statements and just send me a summary - anything that has to be acted on they do for me.

DOES ANYONE KNOW WHERE I CAN GET A LIST OF DIVIDENDS PAID BY ALL ASX COMPANIES [OR EVEN TOP 100] SHOWING IMPUTED CREDITS/%FRANKING ETC. 

I KNOW I CAN GET IT FROM EACH INDIVIDUAL COMPANY BUT AM TRYING TO SAVE TIME

And from the above once we know a div is 100% franked can we make the calculation in the excellent posts above to claim back the imputed credits


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## RamonR (20 March 2010)

If you have a comsec account.
Go to the news/events tab and fom there you will find upcoming dividends.
This has all the info you need.


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## pixel (20 March 2010)

johenmo said:


> Can work out 39.68 + 9.92 = 49.60
> Can work out $4.25 comes from ($9.92*30%/(100%-30%)
> 
> *BUT* if it is 80% unfranked, and this is = $39.68, shouldn't the 100% unfranked = $39.68*100/80? Which is $49.60!
> ...



20% of the *total (paid) dividend* has been taxed (franked) at 30%.
Let's see if I can paste the portion of a spreadsheet in here; the first 2 lines represent the 2 components ($9.92 = 20% of $49.60); the bottom line is the Total:
dividend	frnk%	frAmt	gross
$39.68	0.00%	$0.00	$39.68
$9.92	30.00%	$4.25	$14.17
$49.60	7.89%	$4.25	$53.85

Hope that clarifies it.


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## pixel (20 March 2010)

Julia said:


> I might have missed someone pointing this out, but if you don't have tax to pay you will get a cheque for the franking amount from the ATO.
> Many retirees get a quite decent amount in cash via this mechanism.



That's right, Julia;

If the dividend comes from a stock held in a Superfund, and provided you have held the shares "at risk" for the minimum 45 days, the franking credits will, in most cases, be refunded in full.
see http://www.ato.gov.au/individuals/content.asp?doc=/content/42807.htm&page=10


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## Krusty the Klown (20 March 2010)

freebird54 said:


> DOES ANYONE KNOW WHERE I CAN GET A LIST OF DIVIDENDS PAID BY ALL ASX COMPANIES [OR EVEN TOP 100] SHOWING IMPUTED CREDITS/%FRANKING ETC.
> 
> I KNOW I CAN GET IT FROM EACH INDIVIDUAL COMPANY BUT AM TRYING TO SAVE TIME




http://www.afr.com/share_tables/

These tables are updated daily.


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## ajjack (20 March 2010)

@ pixel


Is the 45 day rule still applicable?
There was talk last year about revising the franking 
credits when applied against all types of income.


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## pixel (21 March 2010)

ajjack said:


> @ pixel
> 
> 
> Is the 45 day rule still applicable?
> ...




Sorry, ajjack (and all)
My mistake  I quoted a rule from 2005.
Apparently, that rule no longer applies. Otherwise, the ATO would've mentioned it in their documentation for last year's tax returns:

http://www.ato.gov.au/content/downloads/IND00191833n41050609.pdf
Now you know why I pay a CPA to do all my tax returns 

Further to my earlier comments about *calculating franking credits*:
The following spreadsheet has been updated to automatically calculate divi components, including tax. 
To download an example: DiviDataWImputation.xlsx

However, since the raw data is pulled off the ASX website, hence there's no guarantee the raw data is correct, I always use the individual company's dividend advice to put into my portfolio database.


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## gooner (21 March 2010)

pixel said:


> Sorry, ajjack (and all)
> My mistake  I quoted a rule from 2005.
> Apparently, that rule no longer applies. Otherwise, the ATO would've mentioned it in their documentation for last year's tax returns:
> 
> ...




There is still a 45 day holding rule, but it only applies if your total franking credits are more than a certain amount - $5,000 last time I looked.


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## freebird54 (22 November 2010)

I use a CPA and have been getting a cheque for the credits - now found as it is a company I should not have got that so expect a letter from the ATO soon ;-(


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