what is the tax on the taxable income due to the dividend?

suppose an individual subject to a 42 per cent marginal rate income tax has 1000 shares in a company that is paying a fully-franked dividend of 21 cents per share. if the company tax rate is 30 per cent:calculate the individual's taxable income due to the dividend?

Public Comments

1. The actual cash dividend received is 1000 x $0.21 = $210.00 The franking credit will be $90.00. The Shareholder would have to add $300.00 (210 +90) to taxable income. This attracts additional tax of 300 x $0.42 = $126.00. This amount less the $90.00 franking credit leaves an additional tax bill of $36.00 to be paid by the shareholder who received the dividend. The nett increase in income as a result of this dividend is $174.00 in the hands of the shareholder after tax at the marginal rate of $0.42. Note that the 21c paid represents 70% of the actual dividend.