franked dividends

What are franked dividends?

Franked dividends are dividends which have a tax credit. The company has already paid tax so when it pays the shareholder a dividend, a tax credit is given to the shareholder. Franked and unfranked dividends can make a significant difference on the after-tax income the shareholder receives. Why were franked dividends introduced? Franked dividends were introduced in Australia in 1987 to avoid double taxation. Companies were already paying a corporate tax rate of 30% on their earnings and distributing their …

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