For lower tax rates and Super Funds, it makes moresense.Dan you make some good points, and you probably already know this, but the income tax you pay is on the 20c. That is, tax on the Cash div of 14c and tax on the Franking Credit of 6c. (Unless you are a Trader for tax purposes, but again, if you are a trader, you are sophisticated and are likely not to be a small shareholder.)
Buying at $1.045, you make 6.5c profit. At a 47% tax rate, you pay 9.4c tax (47% x 20c). Note that tax is payable not on the profit, but on the taxable income (the gross dividend). So you are at a loss of 2.9c per share (if you are a small shareholder). You can shelter some Capital Gains, but it becomes very marginally.
I thought it’s the beginning of the new year, I’ll stick my wife into this. Buy 80k shares and then make sure she doesn’t earn any other franking credits until after 30 Jun 2021. But after Capital Gains offset, it is a small positive return at the 39% marginal tax rate, and only 0.19% return (after brokerage) at the 47% tax rate.
