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. The Power Of Dividend Growth
    Investing Basics

    The Power Of Dividend Growth

  2. The 4 Basic Elements Of Stock Value
    Markets

    The 4 Basic Elements Of Stock Value

  3. How And Why Do Companies Pay Dividends?
    Investing Basics

    How And Why Do Companies Pay Dividends?

  4. Dividend Facts You May Not Know
    Investing Basics

    Dividend Facts You May Not Know

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center