Q: Why is a fully franked dividend yield of 6.5% worth more in the accumulation and pension phase of an SMSF? How do you work it out?
A: Augmented yields arise because fully franked dividend are grossed-up to the amount of $428.57 cents for every $1,000 of dividend income ($1,000 + $428.57 = $1,428.57). The formula to calculate the franking credit is 'cash dividend + 30/70'. This is a franking credit based on the company paying tax at the company rate of 30%.