Franking Credit Calculator

What is a Franking Credit Calculator?

A franking credit calculator works out the tax credits attached to your Australian share dividends and shows whether those credits will give you a tax refund or reduce the tax you owe. Franking credits (also called imputation credits) are a uniquely Australian feature of the tax system — they represent company tax already paid on the profits that fund your dividend, passed on to you so the same income isn't taxed twice.

This calculator grosses up your cash dividend, calculates the franking credit, applies your marginal tax rate, and tells you the net outcome. It's essential for any Australian share investor at tax time, and especially valuable for retirees and low-income earners who often receive cash refunds of their franking credits.

How Do Franking Credits Work?

When an Australian company earns profit, it pays 30% (or 25% for smaller companies) company tax before distributing dividends. When you receive a franked dividend, you also receive a franking credit for the tax the company already paid. You declare the grossed-up dividend (cash plus credit) as income, calculate tax at your marginal rate, then subtract the franking credit. This is the dividend imputation system — it prevents the double taxation of company profits.

How to Use This Franking Credit Calculator

Enter the cash dividend you received, the franking percentage (100% for fully franked, which most large ASX companies pay), and your taxable income excluding the dividend. Select the company tax rate — 30% for large companies, 25% for small base-rate entities. Click Calculate to see the franking credit, your grossed-up income, and whether you'll receive a refund or owe additional tax on the dividend.

What Your Results Mean

The franking credit is the company tax already paid that's attached to your dividend. The grossed-up dividend is your cash dividend plus that credit — this is what you declare as income. Tax on grossed-up dividend is what you'd owe at your marginal rate. The refund or payable figure is the key result: if your marginal rate is below 30%, the credit exceeds your tax and you get the difference back; if above 30%, you pay the shortfall.

What Does "Fully Franked" Mean?

A fully franked dividend (100% franked) carries the maximum franking credit, meaning the company has paid full Australian company tax on the profits behind it. A partially franked dividend (say 50% franked) carries credits on only part of it — common for companies with significant overseas earnings that haven't been taxed in Australia. An unfranked dividend carries no credits at all and is taxed fully at your marginal rate. Most large Australian companies (the big banks, miners, and retailers) pay fully franked dividends, which is a major reason Australian investors favour high-dividend ASX shares.

Who Benefits Most from Franking Credits?

Investors on marginal tax rates below the company tax rate benefit most. Self-managed super funds (SMSFs) in pension phase pay 0% tax and receive the full franking credit as a cash refund. Retirees and low-income earners similarly often receive refunds. Super funds in accumulation phase (15% tax) use credits to offset and often refund part of their tax. Higher-income earners (37% and 45% marginal rates) still benefit by reducing double taxation, but pay top-up tax rather than receiving a refund.

The Holding Period Rule

To claim franking credits, you generally must hold the shares "at risk" for at least 45 days (90 days for certain preference shares), not counting the purchase and sale days. This rule prevents investors from buying shares just before a dividend purely to capture the credits and selling immediately after (known as dividend stripping). There's a small shareholder exemption: if your total franking credits for the year are $5,000 or less, the 45-day rule doesn't apply to you.

Franking Credits in Your SMSF

Franking credits are particularly powerful inside a self-managed super fund. In accumulation phase, the fund pays 15% tax — well below the 30% company rate — so franked dividends typically generate a net refund that offsets tax on other income. In pension phase, the fund pays 0% tax, meaning the entire franking credit is refunded in cash. This is why many SMSF retirees build portfolios around fully franked Australian shares — the franking refunds can add a meaningful boost to retirement income.

Common Franking Credit Mistakes to Avoid

• Forgetting to declare the grossed-up amount. You declare the cash dividend plus the franking credit as income — not just the cash you received.
• Missing the 45-day holding rule. Selling too soon after a dividend can disqualify you from the credits (unless under the $5,000 exemption).
• Assuming all dividends are fully franked. Check each dividend statement — partially franked and unfranked dividends carry fewer or no credits.
• Overlooking refunds you're owed. Low-income earners and retirees may be entitled to cash refunds but miss them by not lodging a return or the refund form.
• Using the wrong company tax rate. Small base-rate companies frank at 25%, not 30% — using the wrong rate misstates the credit.

Limitations of This Calculator

This calculator computes the franking credit and the tax outcome on a single dividend using 2025–26 resident marginal rates plus the 2% Medicare levy. It assumes you satisfy the holding-period rule, doesn't model the Medicare levy surcharge, other tax offsets, capital gains, or the interaction of multiple income sources, and treats the dividend as stacked on top of your stated income. SMSF and company shareholders have different mechanics. For official information, see the ATO's guidance on dividends and franking credits.

Frequently Asked Questions