re:guess on opening price ajax, page-2

Hi Blueice,

The dividend is 40c fully franked i.e. tax has already been paid on this by the company at 30c in the $.

In your tax return you would include this in the form of a grossed up amount i.e as if no tax had been paid.

To do this multiply 40c by 10/7=57.14c

You include this grossed up amount in your individual tax return. This would be similar to any sharetrading profit.

You then claim a franking credit (for tax alrady paid by the company) of 17.14c.

The best way to look at fully franked dividends is to gross them up-then compare with the fall in share price on the ex-dividend date.

There are other rules relating to this ie. 45 holding rule including the at risk requirements and the small trader exception (where an individual has franking credits of less than $5000 in any one year -this equates to fully franked dividends less than $11,666.66/year ).

Ajax