There is nothing sweeter in life than getting some of your tax refunded - except for getting tax refunded which you hadn't even paid! Let me explain (although Wikipedia does it very well):
In 1987 the Hawke/Keating government put an end to double-taxation on company dividends by introducing the dividend imputation system which meant that the 30% company tax paid on dividends was passed on to shareholders.
In 2000, franking credits arising from the dividend imputation system, which had until then been an offset against other income tax payable, became fully refundable.
In 2007, the Howard government made income from a superannuation fund for self-funded retirees once they were 60 years of age totally tax-free.
In early 2011, BHP bought back its own shares at a price which was made up of just 28 cents capital component with the balance - a whopping $40.57 - deemed to be a fully franked dividend which meant it had a 30% franking credit, or $17.38 a share, attached to it.
BHP bought back a fair slab of shares from my totally tax-free superannuation fund and made my fully refundable franking credit cup runneth over! For which the Deputy Commissioner of Taxation has just now made a six-figure electronic transfer to my superannuation fund's bank account.
Thank you, Mr Duffus, Deputy Commissioner of Taxation! Thank you, BHP! And thank you, Mr Hawke, Mr Keating, and Mr Howard!
