Hi Im a newbie and very confused, but also really excited about learning how to trade in shares. As my circumstances has recently changed, I am now a stay at homer and need to get some $$$ back into my account. I have been reading quite a lot of things about share trading, problem is I think I have been reading too much!! I am going to go back to basics and start at the beginning.
Hi Miguel, and welcome
) have the choice to re-invest the money into new projects or simply to expand, or they can pay a certain percentage to their shareholders as a dividend. In either case though, they have to pay tax first. Currently, the company tax rate stands at 30%.
I had a similar run with this stock when it was 2.5cents. It fell to 2c after some legal challenge so I topped up and later sold the "excess" parcels at 2.5 and sold the rest at 3c.Hi all
Only been trading for a few weeks now and jumped straight into it without any real research
Bought into AVZ at way too high a price at 0.170. It dropped pretty quickly for a couple of weeks and I kept buying more at lower prices to try and average down. Ended up with 18k at 0.116. Finally into profit now and it's at 0.135 but not sure if I should sell or hold on longer. Any tips would be great, cheers
Hi pixel, thanks for your explanation. That part is now clear. I also read other threads, as Joe Blow suggested. However, this is the paragraph that I still don't quite get, the "imputation credits" bit:Hi Miguel, and welcome
Just a quick reply on franking credits.
Companies that make profits (not all of them do
For a shareholder, dividends are like wages and therefore subject to personal income tax.
However, if a dividend is paid out of "after-tax earnings", the Taxman has already taken 30% in tax; slugging the shareholder the full marginal tax rate, which could be as high as 48%, would be considered too greedy, even by Tax Office standards. Therefore, those 30% that have already been paid on shareholders' behalf are credited back to them.
The Maths is rather simple:
Assuming you, the shareholder who received the dividend, got paid $7,000. The pre-tax amount, that is the money which your company must have earned and paid 30% tax on, is $10,000 (30% = $3,000 has been paid on your behalf to the ATO.)
So, your share of the earnings is $10,000. If your marginal tax rate is 48%, you only need to pay the additional 18% or $1,800 on those 10 Grand. If you're in a lower tax bracket, the 30% pre-paid tax may exceed your personal rate and you may have been overtaxed.
Both cases are covered by the "Franking Credit", which is fancy speak for saying "those 30% paid on your behalf by the company are credited against your tax obligation." For it to work correctly, all that has to be done is to add the "grossed-up" dividend to your income.
No.
Welcome to ASF Natlan! A good place to start might be the Where to start? thread. Other than that, just start doing some searches on topics that interest you. There's almost 24,000 threads here at ASF so there's plenty of content to explore.
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