A franked dividend should see more cash in your pocket than a simple share sale however there are lots of variables that will affect everyone differently. The amount of the franking credit will reduce your tax bill or, put you in a tax refund position. It depends on your personal tax position. On face value this should be better than a capital gain (even discounted). For example let’s assume the dividend is 100% franked (like most VGW dividends last year). In my case my shares are held in my SMSF which pays tax at 15%, so if the buyback was for, say, $100,000 then on face value I would have to pay tax at 15% on income, so $15k, however because of the franking credit I would instead receive a cash refund of about $15,000 ($115k all up)(this is a very rough calculation… it’s a bit more complicated than what I am showing). If it was a straight sale and not a franked dividend my tax would depend on my cost base and how long I’ve owned the shares. In my case the cost base is 6 cents and I’ve owned them for about 9 years so basically the full amount is taxable, so I get a 33.3% CGT discount in the super fund so the $100k profit becomes $66k which is taxed at 15% so I pay $10k tax leaving net proceeds of $90k. So as a franked divvy I get $115k vs $90k as a straight sale. As I said it’s complicated and depends on a whole bunch of different factors.
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