Franked distributions can be made by companies and other corporate tax entities that are Australian residents for tax purposes.
Does that mean that companies have a choice on how they choose to distributed their dividends?
I’m just fishing from more knowledge posters, to either confirm or debunk my line of thinking. I tend look at issues from a different perspective, probably more then the average poster.
What I’m going to putting forward is a repeat of my comments on a number off previous posts which had Economists and Financial adviser submitting their comments. No one has as yet confirmed whether my line of thinking is valid or I’m talking crap. Usually if you are talking crap, they jump on you like a ton off bricks!
If companies have a choice, then it would be more advantageous for shareholders who don’t have the ability to utilise the credit against taxable income to be paid with unfranked dividends.
Since companies have the ability to do DRP electronically, it would be simple for companies to give shareholders the option to elect payment as franked or unfranked dividend.
As the majority of companies are PAYG to the tax department and generally pay dividends twice a year.
My theory is the government is borrowing the franking credit of the interim dividend for at least 6 months, without extra compensation to the shareholder.
It would be financial advantageous to some shareholders to receive the higher unfranked credit instead.
Thus using their dividends to immediately start earning income instead on a deferred basis.
