this post was submitted on 18 Sep 2024
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It's a bit like when your employer pays part of your pay to the ATO in anticipation of future tax. If the company distributes money they have already paid tax on you will have a dividend that is paid directly to you, plus an amount that has been paid in tax. Fully franked means the company has paid tax on the whole lot, partially franked means they only paid tax on a part of it. When you come to do your tax return the ATO will work out how much you actually owe (based on the tax rate for your income) and either ask for a bit more tax or refund the extra.