All Topics / Finance / Dividend income and franking credits

Viewing 4 posts - 1 through 4 (of 4 total)
  • Profile photo of LouiLoui
    Participant
    @loui80
    Join Date: 2016
    Post Count: 13

    Hi guys,

    Prob an easy question for my broker friends here, but can you explain how banks look at the tax payable in your servicing position when you have franked dividends paid. Do they adjust the real tax paid by you by looking at the tax assessment with your franking credit or do they just take the conservative approach and input your dividend along with all your other income and then the calculator works out the tax payable from there end on a total basis? Wouldn’t this play a big factor in your borrowing capacity given tax has already been paid on this before by the company paying the dividend?

    Thanks

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Firstly lenders normally only consider dividend income where there is consistency over 2 Tax Returns.

    Assuming all good most would add banking the franking credits and recalculate your tax payable dependent on your Tax rate.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of LouiLoui
    Participant
    @loui80
    Join Date: 2016
    Post Count: 13
    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Generally they will want to see two years history of dividends being received evidenced via tax returns. Some lenders will also cap the amount of dividend income yield – deeming it only at a marginal amount.

    Few options, but generally dividends aren’t big serviceability buffs compared to residential property rents or paying down non deductible debt.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

Viewing 4 posts - 1 through 4 (of 4 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.