Question 1

How are franked dividends taxed in Australia?

Accepted Answer

Franked dividends come with a franking credit representing the 30% company tax already paid. You include the dividend plus the franking credit in your taxable income, then receive a tax offset for the credit. If your marginal rate is below 30%, you get a refund of the difference.

Question 2

Do I pay tax on unfranked dividends?

Accepted Answer

Yes. Unfranked dividends are taxed at your marginal tax rate with no franking credit offset. They are added to your other income and taxed accordingly.

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