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To: Patrick Slevin who wrote (140984)	2/2/2007 4:51:58 PM
From: Moominoid	Read Replies (1) \| Respond to of 209892

The way the franking/imputation system works in Aus is that attached to dividends are credits for the corporation tax paid by the company. These credits can then be used by the tax payer as tax credits to reduce their tax liability. To a large extent this elminates double taxation. For example: Company earns a profit of $1 per share. Pays tax of 30 cents. Issues a dividend of 80 cents with a franking credit for 24 cents attached to it. Tax payer is due a tax at the top marginal rate of 45% of 36 cents. They then take the 24 cents credit and pay 12 cents in tax. If the company earns profits outside Australia they can't issue a credit - only counts for profits generated in Australia. The tricks start where you buy shares on margin. Say you borrow enough to pay 80 cents in interest. Then you can deduct the 80 cents and are left wth a 24 cent credit. This credit can be applied to you other tax liabilities. There are no limits to the credit... So margin is very popular in Aus... Most of the Australian economy is not resource oriented though a large fraction of exports is resource oriented. 80% + of the stock market capitalization is "industrial shares" rather than "resource shares". My current Aussie individual stocks are: Ansell (surgical gloves, condoms etc.) Powertel (telecom) Symbion (healthcare) EBB.AX (hedge fund manager) EBI.AX (fund of hedge funds) Clime (CAM.AX) (closed end stock fund - no resources) Clime (CIW.AX) (investment manager) Platinum Capital (closed end global hedge fund like) Challenger Infrastructure Fund Croesus Mining (suspended bankrupt gold mining firm - but supposedly will one day trade again). I also own 4 Aussie mutual funds