that’s simply not true, at 50% tax rate the following...

that’s simply not true, at 50% tax rate the following happens.

without franking, $1 of income would be tax 50% which is $0.50 tax meaning you keep the remaining $0.50 for yourself.

But, when the dividend is franked you get the same $1 of cash + $0.43 in franking credit and it is applied as follows.

$ 1.43 is added to your taxable income, you are then charged $0.715 in the tax on that based on 50% tax rate, but they then allow you to deduct the original $0.43 franking credit, meaning you only actually have to hand over $0.285.

So even though your tax rate is 50%, you only had to hand over $0.285 out of your $1.00 not the $0.50 you would have with out the franking credit.

so you keep $0.715 of your dividend instead of only $0.50.

if you don’t believe me pull out your tax returns. Because this is exactly as it’s calculated.