Ann: Telstra's Half Year Results Announcement, page-84

re: Ann: Telstra's Half Year Results Anno... Zwu,

"Whether you can utilise the 6c franking credit all depends on your marginal tax rate."

Not so. Grossed up value of dividend gives you assessable income from this source. Add to that assessable income from other sources, subtract allowable deductions and you have taxable income. Calculate tax payable. THEN - subtract franking credits - presto, we have tax payable.

"If your marginal tax rate equals nil, then you can."

Not so. Only thing that excludes use of franking credits is domicile of taxpayer - Australian taxpayers can claim full credit of company tax embedded in their dividends against taxable income.

"If your rate is 30%, then you have to return the 6c to ATO in full and get nothing."

Not so. I assume you mean marginal rates. These are determined by calculation as outlined above. It is impossible to return the 6c fronking credit to the tax dept as you don't have it.

"If your rate is above 30%, then you have to return more than 6c to ATO and you actually have a loss."

Not so. If as a result of calculating your taxable income you have a marginal tax rate in excess of 30%, then your tax liability will still be reduced by any franking credits. Any additional tax payable is a result of your total income pushing you into higher brackets. Before the introduction of divdend imputation you would have born the 30% company tax and then your marginal rate would have been applied to the full amount of dividend received - 14c in this case, leaving you with considerably less.


I am not a tax agent - just a taxpayer. dyor