MLX generating franking credits to pay franked dividends is very relevant to non-resident taxpayers. As there are Australian dividend withholding tax exemptions on franked dividends paid to non-residents.
The exemption for Australian dividend withholding tax (WHT) is limited to where the dividend paid to non-resident entities is franked or the dividend is unfranked but sourced from foreign income. In the, potential, case of MLX paying a dividend, WHT would be deducted from any unfranked dividend payments made to non-resident taxpayers.
While being exempt from the dividend WHT the non-resident entity is not entitled to any franking tax offset They can not use the franking credit attached to reduce the tax payable on other Australian income and they can not get a refund of the franking credit.
My expectations (wishful thinking perhaps) in respect to payment of dividends is that once MLX starts earning franking credits (ie paying corp tax) allowing them to make fully franked dividend payments we may see dividend distributions being made.
MLX Price at posting:
71.5¢ Sentiment: Buy Disclosure: Held
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