The advantages of unfranked dividends

Spread the Word
Listed Under

* Unfranked Dividends
* Accounting Sydney
* Accountants Sydney

* Accounting

* Sydney - New South Wales - Australia

SYDNEY - May 22, 2018 - PRLog -- An unfranked dividend represents company profits paid to shareholders which has no tax credits attached to the dividend. Ed Chan of Chan & Naylor accounting firm in Sydney talks about its advantages in detail.
All dividends whether franked or unfranked are not a tax deductible expense to the company.

It's paid as a profit distribution but after tax is paid.

So if $100 profits is made and tax of $30 has been paid by the company leaving $70 Net Profit, the company can pay the whole $70 as franked dividends or partly as unfranked. It may also decide to only pay part of the $70 as a dividend whether franked or unfranked.

This is all disclosed in their tax returns but it's an after tax consideration. 
Why would the company pay franked versus unfranked?

Normally if the company has paid company tax, the tax is held in an account called a Franking Account and these are owed to the shareholders.

So it would pay a franked dividend to pass these credits back to the shareholders. There is no advantage to the company in holding onto them.

Why would a company pay an unfranked dividend? 

Some portion of the Net Profit of the company may attract no tax. Hence, these can be distributed out with no tax credits known as unfranked dividends.

When can a company earn income that has no tax? 

Some expense items such as depreciation or amortization or sale of an asset that maybe exempt from tax.

These form the basis of dividends that are paid as unfranked dividends.

If you receive a franked dividend of 5%, that's the equivalent of a gross dividend before tax of 7.15% gross.

To work it out, you simply divide 5% by 0.70 (assume company tax at 30%).

If you would like to know more about unfranked dividends and how they are advantageous to your business, you can click here ( to know more about Chan & Naylor services ( You can leave your details here ( and we can schedule you for a free consultation. Chan & Naylor accounting firm in Sydney will contact you to explain more.

Whether you are a beginner, seasoned investor or business owner, our property and business tax accountants can give you guidance to maximise the financial areas of your life. We can also give you an integrated and tailored solution for your superannuation, taxation, property investment, asset protection, estate planning and more.

Click here ( to schedule a chat or visit any of our local offices ( near you.

If you like what you are reading, subscribe to our newsletters now at ( or follow our Facebook page:

Chan & Naylor Group has nationwide offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and South West Sydney, Parramatta, Pymble, North Sydney, and Sydney in New South Wales.

Disclaimer (
Chan & Naylor News
Most Viewed
Daily News

Most Viewed
Daily News
PTC News

May 22, 2018 News

Like PRLog?
Click to Share