Unfranked Dividend, Franked Dividend, Franking Credit Concept
Example:1 At the time of Issuing Dividend by Company
Company Tax Rate = 26%
Maximum Company Can Issue Franked Dividend
(1300/26%) X100= $5000 (Gross)
If Company Issued more than $ 5000 Dollars as a Dividend then the Balance Amount is Called Unfranked Dividend
For Example: In the Above case if the Company issue $ 7000 as a Dividend, then
If the company Paid Less than $ 5000 as a Dividend then the balance will show as input credit
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Example: 2 Franking Credit
Per Share companies profit $2.1428
Corporate tax on Profit 30% $0.6428
Per Share Net profit after Tax $1.50
Which is Tax for the company The same is Franking Credit for shareholders
The Profit will give to shareholder as a Dividend along with Franking Credit
Example 2a
Individual level ITR @ 19%
The individual received net Dividend from company 1.50
Franking Credit 0.6428
Taxable Income 2.1428
(DPS + FC)
Tax rate 19% 0.4071
Franking Credit (0.6428)
Tax Refund 0.2357
Example 2b
Individual level ITR @ 45%
The individual received net Dividend from company 1.50
Franking Credit 0.6428
Taxable Income 2.1428
(DPS + FC)
Tax rate 45% 0.96426
Franking Credit (0.6428)
Tax Refund 0.32146
