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. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Free Reserves

    A measurement of a bank's reserves that is equal to the difference ...
  3. Stock

    A type of security that signifies ownership in a corporation ...
  4. Accounting

    The systematic and comprehensive recording of financial transactions ...
  5. Dividend Policy

    The policy a company uses to decide how much it will pay out ...
  6. Triple-Tax-Free

    An investment (usually a municipal bond) featuring interest payments ...
RELATED FAQS
  1. What are some examples of a deferred tax liability?

    In the United States, laws allow companies to maintain two separate sets of books for financial and tax purposes. Because ... Read Full Answer >>
  2. What dividend yield is typical for companies in the industrial sector?

    The average dividend yield of the industrial goods sector is approximately 1.71%. The industrial goods sector is a group ... Read Full Answer >>
  3. Which REITs pay the highest dividends?

    A real estate investment trust (REIT) is a financial security that trades like a stock on major market exchanges. However, ... Read Full Answer >>
  4. For what types of investments is the payout ratio the most relevant?

    The payout ratio is most relevant for investments that pay out dividends to shareholders. The payout ratio indicates the ... Read Full Answer >>
  5. When does a primary market become a secondary market?

    The difference between the primary and secondary markets is a simple matter of issue versus resale. While both marketplaces ... Read Full Answer >>
  6. What is the average annual dividend yield of companies in the electronics sector?

    The chemicals industry is part of the basic materials sector which, as of 2015, is the highest dividend-paying sector on ... Read Full Answer >>
Related Articles
  1. Investing Basics

    The Power Of Dividend Growth

    Dividends may not seem exciting, but they can certainly be lucrative. Learn more here!
  2. Markets

    The 4 Basic Elements Of Stock Value

    Investors use these four measures to determine a stock's worth. Find out how to use them.
  3. Investing Basics

    How And Why Do Companies Pay Dividends?

    If a company decides to pay dividends, it will choose one of three approaches: residual, stability or hybrid policies. Which a company chooses can determine how profitable its dividend payments ...
  4. Investing Basics

    Dividend Facts You May Not Know

    Discover the issues that complicate these payouts for investors.
  5. Investing Basics

    Digging Into Book Value

    This calculation will serve up your portion of the shareholder pie.
  6. Taxes

    Corporate Tax Rates: The Highs and the Lows

    The United States is No. 2 in the world for its high corporate tax rate. There are ways around paying it, and many nations with lower rates are worse off.
  7. Entrepreneurship

    What's the Verdict on START-UP NY?

    START-UP NY is an initiative designed to attract companies to New York State by giving them 10 years of tax breaks. Sounds good, but is it a success?
  8. Investing

    Where Dividend Investors Are Seeking Income

    Dividend investors are turning to sectors such as health care, technology and financial services where the earnings seem strong and the Fed seems distant.
  9. Charts & Patterns

    Are These the Top Dividend Stocks of 2015?

    These dividend-paying companies offer a lot more than just dividends.
  10. Savings

    How to Invest in Liquor (and Avoiding the Hiccups)

    Investing in liquor has been profitable for ages but there could be some hiccups along the way.

You May Also Like

Hot Definitions
  1. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  2. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  3. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  4. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  5. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center