Why use this calculator
Australia's dividend imputation system means that franking credits attached to company dividends can significantly reduce your tax liability or even generate a tax refund. Understanding how franking credits work and their value to you personally is essential for evaluating Australian share investments. This calculator shows the full picture: the grossed-up dividend, the franking credit value, and your net tax position.
How to use it
Enter the cash dividend amount you received (or expect to receive), the franking percentage (100% for fully franked), the company tax rate (30% for large companies, 25% for base rate entities), and your personal marginal tax rate. The calculator shows your franking credit, grossed-up dividend, and net tax position.
The formula
Franking Credit = Dividend x (Franking % / 100) x (Company Tax Rate / (100 - Company Tax Rate)). Grossed-Up Dividend = Dividend + Franking Credit. Tax on Grossed-Up = Grossed-Up Dividend x Marginal Rate. Net Tax = Tax on Grossed-Up - Franking Credit.
Worked examples
$1,000 fully franked dividend at 30% company tax, 37% marginal rate
Franking credit of $428.57, grossed-up dividend of $1,428.57, net tax of $99.57
$1,000 fully franked dividend at 30% company tax, 19% marginal rate
Franking credit exceeds tax owed, resulting in a tax refund
When people use it
- Evaluating the after-tax return of Australian dividend shares
- Comparing franked vs unfranked dividend investments
- Tax planning around dividend income for retirees
- Understanding the true value of franking credits at different tax brackets
Tips
- Franking credits are most valuable if your marginal tax rate is lower than the company tax rate
- Retirees with low or zero tax rates can receive full franking credit refunds
- The 45-day holding rule requires you to hold shares at risk for at least 45 days to claim franking credits
- Partially franked dividends still provide a proportional benefit
Questions people ask
- What are franking credits?
- Franking credits (also called imputation credits) represent company tax already paid on profits before they are distributed as dividends. They prevent double taxation by giving shareholders a credit for the tax the company has already paid.
- Can I get a refund for excess franking credits?
- Yes. If your franking credits exceed your tax liability, you may be eligible for a refund of the excess. This commonly benefits retirees and low-income earners who have a marginal tax rate below the company tax rate.
- What is the difference between fully and partially franked dividends?
- A fully franked dividend has franking credits for the full company tax rate (e.g., 30%). A partially franked dividend only has credits for a portion. For example, a 50% franked dividend at 30% company tax means only half the dividend carries a franking credit.