Re: Australian Dividend Franking

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Posted by Mark on May 10, 2006 at 10:12:35:

In Reply to: Re: Australian Dividend Franking posted by Gary Wilson on May 10, 2006 at 01:52:43:

: Mark,

: There are a couple of issues here; irrespective of juristiction many investors receive dividends that may be simple taxable cash or be net of withholding tax and/or carry a tax credit (so called franking credits in Australia). Therfore as discussed users need to add back withholding tax & tax credits to ensure all dividends are placed on the same basis. In other words gross dividend value is received & it can be 100% cash or it can be cash plus some other non cash values. I have called the cash component in FM "Dividends" & placed non cash (dividend) value in "other" (distribitions). [I presume this has no yield impact?] This treatment does give me a reminder about this issue when I print out a Distributions Report - however I am now considering putting this grossed up value all in the Dividend category (for simplicities sake). In any case, to this extent, there is no big deal in accounting for Australia franking credits. The issue arises for those who reconcile to cash account (I don't use this feature). Possibly a simple solution is to provide for cash & non cash elements for dividend value.

: As for after tax yields etc; having thought about this over my years of using FM I can say its obviously what all investors ultimately focus on - but I think you are right to be reluctant to go down this track - it could be a never ending nightmare which would detract from a proven product. ;-)

Hi Gary,

Thanks for the post, and your points. To answer your question above... There is no effect on yield based on the type of distribution you pick.

Thanks,
Mark
--
Fund Manager - Portfolio Management Software

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