Question 624 franking credit, personal tax on dividends, imputation tax system, no explanation
Which of the following statements about Australian franking credits is NOT correct? Franking credits:
(a) Refund the corporate tax paid by companies to their individual shareholders. Therefore they prevent the double-taxation of dividends at the corporate and personal level.
(b) Are distributed to shareholders together with cash dividends.
(c) Are also called imputation credits.
(d) Are worthless to individuals who earn less than the tax-free threshold because they have a zero marginal personal tax rate.
(e) Are worthless to individual shareholders who are foreigners for tax purposes.