Franked Income

DEFINITION of 'Franked Income'

After-tax investment income that is distributed by one U.K. company to another. This income is often distributed in the form of dividends. The idea behind franked income is to prevent double taxation.

BREAKING DOWN 'Franked Income'

If Company A receives a franked dividend from Company B, Company A does not have to pay corporate tax on the dividend because Company B has done so already.

In other words, once the issuing company has paid corporate tax on the income being distributed, the tax payment is attributed also to the companies who receive the franked dividend.

RELATED TERMS
  1. Franked Investment Income

    Income that is received as a tax-free distribution by one company ...
  2. Franking Credit

    A type of tax credit found in countries such as Australia that ...
  3. Franked Dividend

    An arrangement in Australia that eliminates the double taxation ...
  4. Dividend Imputation

    An arrangement in Australia and several other countries that ...
  5. Double Taxation

    A taxation principle referring to income taxes that are paid ...
  6. Dividends Received Deduction - ...

    A tax deduction received by a corporation on the dividends paid ...
Related Articles
  1. Investing

    What's a Franked Dividend?

    A franked dividend is an arrangement in Australia that eliminates the double taxation of dividends.
  2. Personal Finance

    Explaining Double Taxation

    Double taxation refers to income taxes being imposed twice on the same source of earned income.
  3. Retirement

    Understanding How Dividends Are Taxed

    Learn how dividends are taxed by the IRS, and understand the different types of dividend income as well as the capital gains tax rates.
  4. ETFs & Mutual Funds

    Understanding Taxes on Mutual Funds Dividends

    Learn about the basics of mutual fund dividend taxation, including how and why mutual funds pay dividends and when different tax rates apply to dividend income.
  5. ETFs & Mutual Funds

    How to Find Mutual Funds With High Dividends

    Learn about the important factors to consider when looking for mutual funds that pay high dividends, including how they may impact your taxes.
  6. Personal Finance

    The Top 5 Countries for Dividend Investing (WBK, BBL)

    Read about the five best foreign countries for American dividend investors, based on a ranking of their average after-tax dividends and tax-withholding laws.
  7. Investing

    How And Why Do Companies Pay Dividends?

    The arguments for dividends include the idea that a dividend provides certainty about a company’s well being.
  8. ETFs & Mutual Funds

    The Basics of Income Tax on Mutual Funds

    Learn about the basics of income tax on mutual funds, including what types of income may be subject to the capital gains tax rate.
  9. Financial Advisor

    Understanding How Mutual Funds Pay Dividends

    The process by which mutual fund dividends are calculated, distributed and reported is fairly straightforward in most cases. Here's a look.
  10. Investing

    Due Diligence On Dividends

    Understanding dividends and how they work will help you become a more informed and successful investor.
RELATED FAQS
  1. Will I have to pay taxes every year when I receive the $25,000 from my trust fund?

    My inheritance is in the form of a trust fund that distributes $25,000 per year for 10 years. ... Read Answer >>
  2. Is dividend income taxable?

  3. Can dividends be paid out monthly?

    Find out if stocks can pay dividends monthly, and learn about the types of companies most likely to do so and how monthly ... Read Answer >>
  4. If I reinvest my dividends, are they still taxable?

    Take a brief look at how the Internal Revenue Service taxes different kinds of dividends, including taxation on dividends ... Read Answer >>
  5. What is the double taxation of dividends?

    After all is said and done, companies that have made a profit can do one of two things with the excess cash. They can (1) ... Read Answer >>
  6. In what situations must taxes be paid on a stock dividend?

    Understand the situations in which investors must pay taxes on stock dividends received, and the different tax rates that ... Read Answer >>
Hot Definitions
  1. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  2. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  3. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  4. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  5. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
  6. Security

    A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship ...
Trading Center