Franked Investment Income

AAA

DEFINITION of 'Franked Investment Income'

Income that is received as a tax-free distribution by one company in the U.K. from another. This income is typically tax-free to the receiving firm and is usually distributed in the form of a dividend. Franked investment income was introduced in the interest of avoiding double taxation of corporate income.

INVESTOPEDIA EXPLAINS 'Franked Investment Income'

If ABC company pays franked investment income to XYZ company, XYZ company does not have to pay tax on the income. This is because the tax was assessed on ABC company before the income was paid. In essence, the tax paid on this income is also attributed to the receiving firm.

RELATED TERMS
  1. Free Reserves

    A measurement of a bank's reserves that is equal to the difference ...
  2. Accounting

    The systematic and comprehensive recording of financial transactions ...
  3. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  4. Dividend Policy

    The policy a company uses to decide how much it will pay out ...
  5. Stock

    A type of security that signifies ownership in a corporation ...
  6. Triple-Tax-Free

    An investment (usually a municipal bond) featuring interest payments ...
Related Articles
  1. Investing Basics

    The Power Of Dividend Growth

  2. Markets

    The 4 Basic Elements Of Stock Value

  3. Investing Basics

    How And Why Do Companies Pay Dividends?

  4. Investing Basics

    Dividend Facts You May Not Know

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center