A dividend that comes from already taxed earnings is known as a “fully franked” dividend. Franked dividends have what is known as a “franking credit” attached, representing the amount of tax the company paying the dividend has already paid. Franking credits are also often referred to as “imputation credits”.

What does a fully franked dividend mean?

Dividends can be fully franked (meaning that the whole amount of the dividend carries a franking credit) or partly franked (meaning that the dividend has a franked amount and an unfranked amount).

How much tax do I pay on fully franked dividends?

Fully franked - 30% tax has already been paid before the investor receives the dividend. Partly franked - 30% tax has already been paid on the franked PART of the dividend. And no tax has been paid on the unfranked PART. Unfranked - No tax has been paid.