franking

Definition

A mechanism in the Australian tax system that prevents double taxation by allowing companies to pass on tax credits to shareholders for taxes the company has already paid on its profits.

Etymology

Derived from the verb 'frank,' which originally meant to mark a letter for free postage; in finance, it evolved to signify marking dividends as 'tax-paid' to indicate that the recipient receives credit for taxes already paid by the corporation.

In the news

Shine Justice mentions 'franking credits' to explain how they can provide tax-advantaged dividend payments to their shareholders, reflecting the company's commitment to returning value to investors.

Shine Justice FY26 slides: underlying earnings surge despite legacy charges

Investing.com

Related words