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
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 | Australia's leading private lender
Thanks Richard.
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 MeInvestment Focused Finance Strategist - servicing Australia-wide
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