A company paid a 45 percent franked dividend of
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A company paid a 45 percent franked dividend of

A company paid a 45% percent franked dividend of $7,000 to a resident shareholder.

• Required

• Calculate the imputation(franking) credit associated with the dividend and identify which sections the dividend and imputation(franking) credit are assessed under.

• Explain the tax benefits of the imputation (franking) credit to a resident investor.

Hint
Accounts and Finance"A franking credit, also called as an imputation credit, is a type of tax credit that is paid by corporations to their shareholders along with their dividend payments.  Franking credit is basically an example of a tax credit which enables a company to pass on the tax paid at the corporate level to its stakeholders, where the main idea behind the tax credit is to help avoid...

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