Why Companies Pay Unfranked Dividends?

The company has not already paid tax on the money you are receiving. Unfranked dividends are common when you invest in companies which do not pay much company tax because they have a lot of tax deductions available to them – so while they have money they are able to pay to their investors, they do not pay tax.

Can companies pay unfranked dividends?

A resident company may pay or credit you with an unfranked dividend. There is no franking credit attached to these dividends. If you receive an unfranked dividend declared to be conduit foreign income on your dividend statement or distribution statement, include that amount as an unfranked dividend on your tax return.

Are franked or unfranked dividends better?

In short – there is no definitive answer. While your tax situation can benefit from franking credits, it is wise to always seek qualified tax and financial planning advice.