Why use this calculator
Dividend imputation is unusual internationally and genuinely valuable, but it is invisible on a bank statement: the cash that arrives is only part of what you earned. A fully franked dividend comes with a credit for tax the company already paid, and depending on your own marginal rate that credit produces a refund, cancels out, or leaves you owing more.
This calculator makes the whole chain explicit, which matters for two groups in particular. Retirees in pension phase, for whom franking credits are effectively a cash payment from the tax office, and high earners, who need to budget for top-up tax rather than being surprised by it at lodgement.
How to use it
- Take the cash dividend and the franking percentage from your dividend statement, which every listed company issues for each payment.
- Most large Australian companies pay fully franked dividends at one hundred per cent, but partially franked and unfranked dividends are common among companies with overseas earnings. Choose the company tax rate.
- Thirty per cent for large listed companies, twenty-five for smaller base rate entities, which is also stated on the statement.
- Enter your other taxable income, because the grossed-up dividend is added on top and taxed at your marginal rate.
What each result means
- Franking credit
- Tax the company already paid on your behalf. It is a refundable offset, so it can come back as cash if it exceeds your liability.
- Grossed-up dividend
- Cash plus credit. The pre-tax profit that generated your dividend, and the figure that appears as income on your return.
- Tax on the grossed-up dividend
- Tax at your marginal rate on the grossed-up amount, before the franking credit is applied.
- Refund from franking credits
- The credit left over after tax, paid to you in cash. This is what makes franked dividends so valuable in pension phase.
- Top-up tax payable
- Extra tax owed when your marginal rate exceeds the company rate. Budget for it. It is not withheld from the dividend.
- Better off than an unfranked dividend by
- How much more you keep after tax from this dividend than from the same cash dividend paid with no franking credit. Use it to compare a fully franked share with an unfranked investment paying the same cash.
- Cash dividend received
- What actually landed in your bank account on the payment date, before the franking credit is taken into account.
- After-tax value of the dividend
- Cash dividend plus any refund, or minus any top-up tax. The real return from holding the shares.
- Effective tax rate on the dividend
- Tax as a share of the grossed-up dividend. Always your marginal rate, because that is exactly what imputation is designed to achieve.
The formula
The franking credit equals the franked portion of the dividend multiplied by the company tax rate divided by one minus that rate. At 30% the multiplier is 0.4286, so a $7,000 fully franked dividend carries a $3,000 credit. The grossed-up dividend is cash plus credit, which is the amount included in your assessable income. Tax is calculated on that grossed-up figure at your marginal rate, and the franking credit is then applied against the result. If the credit exceeds the tax, the difference is refunded.
How this number is used in practice
Franking credits are why Australian retirees hold so many domestic bank and mining shares. In pension phase the tax rate on earnings is zero, so the entire franking credit is refunded in cash. A fully franked dividend yield of five per cent becomes an effective 7.1 per cent. No other asset class delivers that, and it drives a well-documented home bias in Australian portfolios.
For someone on the top marginal rate the arithmetic reverses. A fully franked dividend is taxed at 47% including the Medicare levy against a 30% credit, so an extra 17% is payable at lodgement. Nothing is withheld along the way, which is why investors with large share portfolios often need to plan for a tax bill rather than expect a refund.
Franking also shapes company behaviour. Australian companies pay out an unusually high share of profits as dividends partly because retained earnings do not carry credits to shareholders. That is worth knowing when comparing an Australian company's yield against an overseas one: the headline yields are not measuring the same thing.
Worked examples
$7,000 fully franked dividend, $85,000 other income
$3,000 franking credit, $10,000 grossed-up dividend. At a 30% marginal rate plus the levy, roughly $200 of top-up tax is payable.
$7,000 fully franked dividend with no other income
The $3,000 credit far exceeds the tax on the grossed-up amount, so most of it is refunded in cash.
$5,000 unfranked dividend, $85,000 other income
No franking credit attaches, so the full $5,000 is taxed at a 30% marginal rate plus the 2% levy. About $1,600 of tax and nothing to offset it.
When people use it
- Working out the real after-tax yield on Australian shares
- Estimating the refund from franking credits in retirement or pension phase
- Budgeting for top-up tax on dividends at a high marginal rate
- Comparing a franked Australian dividend against an unfranked or foreign one
- Checking your dividend statements against what will appear on your tax return
Tips
- At a 30% company rate the credit is the cash dividend multiplied by 0.4286. A $7,000 fully franked dividend carries exactly $3,000.
- Franking credits are refundable in Australia, unlike most countries, which is why they matter so much to low-rate and zero-rate investors.
- Compare franked and unfranked yields on a grossed-up basis. A 5% fully franked yield is equivalent to 7.1% before tax.
- The 45-day holding rule requires shares to be held at risk for at least 45 days around the ex-dividend date to claim credits above $5,000 of total credits.
- Partially franked dividends are common where a company earns profits overseas. Check the percentage on each statement rather than assuming.
- Nothing is withheld from a franked dividend, so high earners should set the top-up tax aside when the dividend arrives rather than at lodgement.
What it assumes, and where it stops being accurate
- The investor is an individual Australian resident who can claim refundable franking credits.
- The 45-day holding period rule is assumed to be satisfied and is not tested.
- Only the Medicare levy is applied alongside income tax; the surcharge and other offsets are not.
- Dividends paid by listed investment companies and trusts can carry different components that are not modelled.
- Foreign income tax offsets on international dividends are outside scope.
Terms used on this page
- Franking credit
- A credit for company tax already paid on the profits behind a dividend, also called an imputation credit.
- Grossing up
- Adding the franking credit back to the cash dividend to arrive at the pre-tax profit figure.
- Fully franked
- A dividend carrying the maximum credit, meaning the company paid full Australian tax on those profits.
- Base rate entity
- A smaller company taxed at 25% rather than 30%, which produces a smaller franking credit.
- 45-day rule
- The requirement to hold shares at risk for 45 days around the ex-dividend date to claim credits above the small-shareholder threshold.
Questions people ask
- How do I calculate the franking credit on a dividend?
- Multiply the franked portion of the cash dividend by the company tax rate divided by one minus that rate. At the 30% company rate that multiplier is 0.4286, so a $7,000 fully franked dividend carries a $3,000 credit and a grossed-up value of $10,000. For a base rate entity paying 25%, the multiplier is 0.3333.
- Do I get franking credits refunded in cash?
- Yes, if the credits exceed your tax liability. Australia is unusual in making franking credits fully refundable to residents, which is why they are so valuable to retirees in pension phase and to anyone below the tax-free threshold. In most other countries an equivalent credit can only reduce tax to zero, not produce a payment.
- What is a grossed-up dividend?
- The cash dividend plus the franking credit. The amount of pre-tax company profit that generated your payment. It is the figure that goes onto your tax return as income, which surprises people whose bank statement shows only the cash. Tax is calculated on the grossed-up amount, then the credit is applied against it.
- What is the 45-day holding rule?
- To claim franking credits you must hold the shares at risk for at least 45 days, excluding the days of purchase and sale, around the ex-dividend date. There is a small-shareholder exemption where your total franking credits for the year are $5,000 or less. The rule exists to stop investors buying just before a dividend purely to capture the credit.
- Are franking credits worth more to some investors than others?
- Yes, and dramatically so. The credit is fixed at the company rate, so the lower your marginal rate the more of it you keep. A super fund in pension phase pays no tax and receives the entire credit as cash; someone on the top marginal rate pays an extra 17% on top. The same dividend is worth substantially different amounts to two different holders.
Use this with
Franking Credits Calculator answers one part of the question. These pick up where it stops: Dividend Yield Calculator, Australian Income Tax Calculator, Capital Gains Tax Calculator and Investment Return Calculator.
Where these figures come from
Figures and rules on this page follow Australian law and ATO guidance.
- ATO: Tax rates for Australian residents. Income tax brackets for 2026-27
- ATO: Study and training loan repayment thresholds and rates. HELP repayment thresholds and the marginal repayment system
- ATO: Medicare levy surcharge income thresholds and rates. Surcharge tiers for singles and families
- ATO: Super guarantee and contribution caps. SG rate 12% and the maximum contribution base
Franking Credits Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.