Franking Credits Explained - Dividend Investing Australia

[@aussieinvestingmachine9912]

Thanks for watching. If you're interested in my investing approach, check out my class on Skillshare. I've revealed all of my stock market tips & tricks! Cheers 😄 skl.sh/31ERbCq

[@ryangrant6446]

You literally answered every question I had regarding franking credits in such an easy to understand way. You're an absolute legend! 10/10 👌

[@puneeth5]

True 👍🏻

[@FrugalRoo]

Thanks for a clear explanation. Wondering if franking credits offer a real benefit. If the company did not pay tax then the dividend would be bigger assuming the same payout ratio. Then everyone would pay tax as normal and the net result would be the same. What am I missing?

[@adamben5717]

Mate, this video is brilliant! Simple, clear and straight to the point. This helped me a lot thank you

[@grace4024]

ur literally going to be the only reason i pass my taxation law exam

[@wiekevisanitagumilar4598]

I have learned so much from this video! thank you for such a fantastic job explaining very light yet super helpful.

[@sachinr896]

This whole concept is so simple. While preparing a tax return the individual puts up all type of income likes salary income, interest income, income from house property and gross dividend (including franking credits). Once, this is done then he computes his tax liability and check how much tax credits he has (which include franking credits). For any shortfall in net tax liability he pays extra tax else take refund from the ATO. So it doesn't matter whether u get franked dividends or unfranked dividends.

[@sonyacarrall3709]

Excellent explanation 👌

[@graciebarrawestryde6442]

7:36 you say you linked a website but it's not there??

[@seaton1288]

True please help

[@timothyandrews8220]

Can we have the website with the companies offering Fully franked dividends please?

[@TheGilbalfas]

This video explained to me the Tax i am saving by owning shares with franking credits. i get it now. Thanku!!

[@paulietv2162]

Hey, thanks for the great explanation but I can't find the link to the site which indicates the franking credit status for individual companies?

[@gersonadr2]

Loved the examples, super helpful! Thanks!!

[@rossygirl79]

You make this so super clear - thank-you so much!!

[@amantamang7559]

Great video. Just a question How do you report reinvested dividends in mytax ? Could you do a video on the steps?

[@jamieayy260]

Hey, I can’t see the link to the website that shows well paying franked dividends stocks/shares???

[@roynelmokhtar1934]

Great video - answered so many questions I had :) Thank you for taking the time to make this

[@life-onmars8223]

Superb explanation! Well done, mate!

[@aussieinvestingmachine9912]

Many thanks!

[@longgeli6880]

Amazing video, really easy to understand and straightforward!

[@aussieinvestingmachine9912]

Thanks for the kind works Longge! Is there anything you like to see in upcoming videos?

[@brycearmstrong5532]

Thx explained this very well. I now understand how franking credits work.

[@MrBoliao98]

You have produced a succinct simple gem of a video. So easy to understand and resolved my problems. But the question now lies, I am a foreigner who has no residency in Australia, how then would I be impacted by the franked dividend?

[@Yahweh42069]

you get no franking credits sorry

[@toffy7598]

I have always understood how franking credits work but not the benefit. if you were to receive an unfranked dividend (thus, the company has not paid tax on this) of $10, would this not just equate to a $7 fully franked dividend? leaving the net benefit for the investor between franked and unfranked 0?

[@Ouki99]

Amazing video! The clear and detailed examples were outstanding~

[@parisajavady6463]

Thank you . You described it so well .

[@driftingintoretirement]

Loving your channel. Great detailed information. Thanks

[@seaton1288]

Hi at 7:35 you said you will like website in the discretion. But no website:( please link

[@alaska1790]

Great video! Thank you 😊

[@priyankamastakar5419]

Amazing video...thank you 😊

[@NihongaDaisuki7]

Easy to understand, thank you!

[@matthewheath7839]

Ive been investing in dividend-paying Aussie companies for over a year now. I simply knew that i should buy a fully franked dividend payer, but i never understood quite why so

[@varunsharma4984]

Very well explained, Thanks

[@Jackson-gl2pv]

Good explanation. Thanks for the spreadsheet!

[@aussieinvestingmachine9912]

No worries, Jackson!

[@ShashiSenthanChoreographer]

This was an awesome video! Thank you for making this!

[@yourcrazymanlol4661]

Great video, very educational

[@sirajkhanal4638]

Hey Mate, Can you make a video of how tax is calculated if investors from Australia invest in US market? How tax is calculated in US, Australia and what happen with dividends?

[@aussieinvestingmachine9912]

Great question! I’ll have to look into it 😊

[@sirajkhanal4638]

@@aussieinvestingmachine9912 Looking forward with the video. There is no content for this in youtube. It will help a lot of Aussie investors investing in US markets if you could make a detailed video regarding how tax is calculated . Thanks

[@101modifiedcars]

thank u so much, awesome explanation !

[@IZDTV]

Really great way of explaining this. Thanks !

[@aussieinvestingmachine9912]

Thanks for the comment, Izzy

[@madifitzgerald6608]

Thank you for this!

[@aussieinvestingmachine9912]

All good Madi :)

[@kingemmma]

Cute thumbnail, love the gramps

[@aussieinvestingmachine9912]

Thanks, Emma!

[@bbunag4063]

Great video! Cheers!!

[@TheYazen]

Sick video mate!

[@aussieinvestingmachine9912]

Thanks Yazz! Anything you’d like to see in upcoming videos?

[@TheYazen]

@@aussieinvestingmachine9912 superannuation is interesting!

[@RobShanB]

Subscribed. Thank you.

[@Waketylerjenkins]

"It's important to check whether a dividend is franked or not before deciding to make a stock purchase." I took the opposite lesson from this video. I learned that it doesn't matter whether a stock is franked or not, you'll end up paying the same amount in tax. What have I misunderstood here?

[@VS-q]

That’s what I thought, right? Maybe the idea is to pay or not to pay extra at tax time

[@markwan7141]

Hey mate, thanks for the video! One thing that still confuses me is: does it matter which tax bracket you're in? Please correct me if I'm wrong but It seems like understanding franking credits is helpful when COMPARING dividend payouts but has no strategic impact on whether you're paying 20% or 45% tax, at the end of the day you're still going to be paying whatever your marginal tax rate is. And as you said, typically companies that don't payout a franked divided usually have higher payouts. So really is this just to compare apples to apples or should it have a bearing on what you should invest in depending on your tax bracket?

[@aussieinvestingmachine9912]

Hi mark. Complicated question. The franking credit is equally important regardless of your tax bracket. A fully franked dividend is always better than an unfranked dividend of the same value even if you pay no tax (because you get a credit!) As always please speak to your accountant. Thanks

[@markwan7141]

@@aussieinvestingmachine9912 Thanks for the reply! I actually kind of proved my self wrong as I was writing a reddit post :P. www.reddit.com/r/AusFinance/comments/nvnn31/does_your_tax_bracket_change_your_attitude/ . Wouldn't have got there without you, thanks mate you're doing an amazing job. Also if you'd like a video idea: "Investing for high income earners" is something I don't see much of. Understanding Tax efficient investments is something I'm trying to dig into at the moment and would love your thoughts.

[@MrBestofGaming]

Very helpful!

[@ashleyn1979]

Does franking dividends apply to ETFs?

[@jasonmills7489]

If your in a low income bracket for example 18k @ 19% but receive 100k in dividends does this then push you into the higher bracket of 118k @ 37% ?? It seems like either way the taxman is going to get his way ? Cheers

[@MrFreekyJ]

Yes, but in your example (assuming the 100K - 70K dividends, 30k Imputed credit - of dividends are "fully" franked) once you apply the franking credit and Medicare levy applied, you will only pay about $1200 in tax

[@vivim777]

Hi, what about if I earn only 10 000 a year and 200000 on dividends how much tax would I pay on dividends ?

[@roryfraser2984]

Hey mate, great video. I was wondering if you are still taxed on dividends for investments that are part of a DRP? And if franking credits are then used?

[@aussieinvestingmachine9912]

I can't give tax or financial advice but this is my understanding of the facts: With DRP's you are not paid any income so you cannot be taxed on this amount. However if you sell the stock you will still be subject to capital gains. If you hold an asset for more than 12 months you are eligible for a CGT discount. www.ato.gov.au/general/capital-gains-tax/working-out-your-capital-gain-or-loss/working-out-your-capital-gain/the-discount-method-of-calculating-your-capital-gain/

[@roryfraser2984]

Ripper thanks, I'll follow up on the link too! Cheers

[@tankoteemusic9755]

Brilliant :D

[@Swandivein]

Thanks!!

[@SteveSnowGO]

What if the doctor stops working and is making $200,000 per year in dividends is the tax rate still 45%

[@christianscorner6730]

So in a nutshell the doctor on 200K would never pay more than the 45% tax rate on dividends? Its just if franking credits are applied (whatever the amount) he would be reducing the amount from 45% to whatever the difference is between the franking level and his 45% tax rate amount? Thanks for the vid.

[@hamzahassan6726]

10/10

[@fififinance7469]

Thanks for this video. Any advice on buying stocks outside your home country? How often would you normally trade?👍💪

[@aussieinvestingmachine9912]

Hi Fifi! Thanks for the comment. I like to focus on ETF's to gain exposure to international markets. In my opinion it makes sense to focus on selecting individual stocks in your local economy, where you best understand the market conditions. If you check out my Portfolio Update playlist you'll see that I'm making a purchase once a week to take advantage of the 'dollar cost averaging' investing strategy. I'll be sure to check out your channel & subscribe :)

[@fififinance7469]

@@aussieinvestingmachine9912 Thanks Jamie - yes i do the same, i often feel like I miss out on US stocks because in the UK and a lot of growth still comes from picking in that market however, i have a hedged ETF which gives me the market return of US so I should be happy with that. I will check out your playlist too :) I have a personal finance channel and would be great to get your feedback, and connect if you like it :)

[@jonhy2x4]

Your awesome

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[@Offender666]

In other words, this is why CEOs pay themselves a "$0" annual salary.

[@kyzzlee]

Wait, if i was a sole trader who made $100k and paid tax at 32.5% my income would be $75,033. If i was a sole director and took a fully franked dividend calculated by company tax rate at 27.5% this would be $27,500 but i would need to pay the individual tax rate at 32.5% which is 32,500 32,500-27,500=5,000 So i would pay 5k tax AFTER receiving the dividend of $72,500. So i would end up with a pay of $67,500. Therefore i would get a higher pay as a sole trader??? That cant be right 🤨

[@aussieinvestingmachine9912]

As sole director, if you took a dividend of $100k, and it was fully franked, this means the company tax has already been paid. Therefore you would only pay 5% tax on that $100k dividend as an individual.

[@r4z0r84]

What if my mate Frank buys some credits and then doesn't pay any taxes coz he works in a fish and chip shop that only accepts cash, I'm not paying his taxes 😂