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Share dividend income and franking credits

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Investors in receipt of dividends from their share portfolio often benefit from investing in shares because they usually have franking credits attached. As a general rule, an Australian resident shareholder is assessed for tax on dividends received plus any franking credits attached to those dividends. The shareholder is assessed on the “grossed-up” income and then allowed a “franking tax credit” in respect of the corporate tax paid by the company on the profits from which those dividends are paid. This system is referred to as…

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