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What is 'franking'?

Wednesday 23rd January 2002

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Q: I have seen the term "franking" used with dividends. Is this the same as imputation credit? Why is a percentage given between 0 and 100?

A: Franking is the Australian version of New Zealand's imputation credits. The percentage value mentioned with the franking credits refers to the percentage of the dividend that has had the tax paid on it. Not all dividends are fully franked so, depending on the circumstances of the individual investor, you may be required to pay more tax on any dividends received.

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