I'm trying to get my head around the proposed changes to franked dividends. Under the current arrangement is it true that a major shareholder of a large company could elect to pay themselves no salary and instead live off franked dividends and they would receive a cash refund equal to the tax already paid by the company? Current tax rate of 30%? So even if those dividends amounted to hundreds of thousands of dollars they would pay zero tax? Or have I misunderstood?
So their tax return would look like:
Salary - zero
Tax paid - zero
Franked dividends - $1mil - $300K paid in campany tax/frankedTax refund $300K cash.
Are these the steps that are taken so large companies effectively pay no tax? ie in the above example the company has paid the tax but its then handed back tot he shareholder who may be one of the directors of the company.
And when labor initially applied this across the board pensioners were the unintended victims (and they are now excluded) when it was aimed at the top end of town?
ETA to change shares to dividends
Edited by Literary Lemur, 16 May 2019 - 03:58 PM.