I have two questions perhaps an expert can help with: 1) When a company has a "franking account balance" of, say, $300 million, what does this actually mean? My understanding is that a franking account balance of $300 mio means a company can pay fully-franked dividends up to $700 million (at the 30% corporate tax rate). Is this correct.
Would it also be correct to say then that in an Australian company that earns all its income in Australia that has never paid a dividend, its franking credit balance is equal to the accumulative corporate tax it has paid over the years?
2) When the corporate tax changes, it is frequently stated that this devalues the value of unused franking credits on a company's franking account. Is this correct? And if so, how?
