Here’s what you need to know today

• Voting has closed in the first round of the French Parliamentary election, and the news isn’t good for French President Emmanuel Macron. His centrist bloc of parties have pulled in around 20% of the vote, trailing the left-wing New Popular Front on 29% and Marine Le Pen’s far-right National Rally on 34%. Macron himself isn’t on the ballot (Presidential elections are held separately) but he may be dealing with a very different Parliament when the final round of voting concludes on 7 July.
  
  

• House prices across Australia rose 8% in the 2024 financial year. That is a strong rebound from a 2% fall the previous financial year. Of the capital cities, Perth was the fastest grower up 24%, followed by Brisbane (16%) and Adelaide (15%).
  
  

• Nine Entertainment, owner of Channel 9 TV station and the Fairfax newspapers, has announced it will cut up to 200 jobs (about 4% of its workforce). This follows Seven West Media cutting 150 jobs and News Corp cutting 80. All 3 media giants have blamed a weak advertising market and the conclusion of commercial deals with Meta (which for Nine Entertainment, reportedly paid $15 million over 3 years).
  
  

• Angst amongst supporters of US President Joe Biden has grown as debate rages about whether he should stand for re-election or stand aside for a younger candidate. A poll released by CBS News and YouGov showed that 46% of registered Democratic voters think that President Biden should step aside.
  
  

• China’s manufacturing sector contracted for the second consecutive month in June. The construction sector also had its lowest level of activity since July 2023. Between tensions with the US and Europe affecting international trade and domestic consumption slowed by the real estate collapse, China’s economy is struggling at the moment.

What the…?

Toys R Us has released one of the first ever artificial intelligence-generated ads by a major company. The ad was made using OpenAI’s text-to-video platform Sora, and to be honest, it’s pretty impressive. As this technology improves the impact on creative and media industries is going to be profound.

A little better everyday

A common question we hear from beginner investors:
Can you explain franking credits and how they work?

We asked Charlie Viola to help us explain:
Charlie Viola is a Partner at Pitcher Partners and is Australia’s No. 4 ranked advisor on Barron's Australia's Top 100 Financial Advisers list

Franking credits represent the tax a company has already paid on its profits before distributing dividends to shareholders. When you receive a dividend, you also receive a credit for the tax the company has paid.

For example, if you receive a $70 cash dividend with $30 in franking credits, your taxable dividend income is $100. When filing your tax return, you include the total $100 as income. If your marginal tax rate is less than 30%, you may receive some of the franking credits back as a refund. If it’s higher, you’ll owe additional tax. This system prevents double taxation of corporate profits and ensures shareholders receive credit for the tax already paid by the company.

You can find out if you have franking credits by looking at your dividend statements, which detail both the cash dividend and the franking credit. These statements are provided by your share registry.

When you file your tax return, these franking credits are included, just like other types of income, in your taxable income. If you’re using an accounting software or a tax professional, they will ensure these are correctly reported.

Franking credits will automatically adjust your overall tax liability, either reducing the tax you owe or increasing your tax refund, depending on your circumstances.

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