It is really a very simple concept. Assume you pay no tax (say,...

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19/03/19

10:25

Post #: 37806449
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Originally posted by cameronb: ↑

If you don't pay any tax and you claim the tax the company has paid on your behalf -then effectively the company has paid no tax as you have been refunded same

The company makes a profit and is taxed on that profit
After tax the company pays out a dividend to its owners, the shareholders.
This dividend is treated income to the shareholders and is thus taxable and added to their income from other sources e.g. wages, interest, capital gains, rental receipts ect.

However as company owners they have already paid tax on this income they are granted a credit, franking, so as not to be taxed twice on this income. This is the purpose of Franking Credits to prevent double taxation on dividends from company's that have paid tax

If you're in a position whereby you don't pay any tax you cannot be taxed twice, you're not taxed at all. Therefore you lose the franking credit.

Were you to keep the franking credit then, upon the dividend you received, the government would effectively lose the tax paid by the company

Someone has to pay the tax.

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It is really a very simple concept. Assume you pay no tax (say, through a pension fund). You invest in a company that makes $1000 pre-tax profit leaving $700 to distribute to you. You also invested in a property that nets you $1000 in rent. You also have deposits in a bank that pays $1000 interest.

Since your fund does not pay tax, you received $1000 from rent, $1000 in interest but only $700 in dividends. Bill Shorten's franking credit policy is blind robbery. Full Stop.

The only argument you have left is that they want to boost property prices through this policy.

TLS Price at posting: $3.26 Sentiment: Hold Disclosure: Held
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