Let's Talk Aussie Franking Credits

• To an Australian individual investor, franking credits simply recognise tax already paid by a company on their earnings. These credits may reduce tax you would otherwise pay on dividend income.

• This dividend imputation system prevents double taxation and essentially treats company tax paid as a prepayment of shareholder tax.

• The system makes a lot of sense. It's a curious thing so few countries have adopted a similar corporate tax structure.