Franking Credit Calculator Australia
Work out the franking credits attached to your Australian dividends and how they reduce your income tax under the dividend imputation system.
Franking Credit Calculator Australia
Work out the franking credits on your Australian dividends and how they reduce (or refund) your income tax under dividend imputation.
• After-tax income (incl. refund): $930.00
• Franking credit = franked amount × (company tax rate ÷ (1 − company tax rate)). For a fully franked dividend at the 30% rate, a $700 dividend carries $300 in credits and grosses up to $1,000.
What are Franking Credits?
Franking credits (also called imputation credits) are attached to dividends paid from profits on which the company has already paid tax. Australian resident shareholders use these credits to reduce their personal income tax — this is the dividend imputation system.
How Franking Credits are Calculated
For a fully franked dividend, the franking credit is calculated as dividend × (company tax rate ÷ (1 − company tax rate)). At the 30% corporate rate, a $700 dividend carries $300 in credits and grosses up to $1,000. Your tax is calculated on the grossed-up amount, then the credits are offset against it.
Marginal Tax Rates and Refunds
If your marginal tax rate is lower than the company tax rate, the excess credits are refundable. If it is higher, you pay the difference. This makes franking credits especially valuable for low-income and retired shareholders.
Company Tax Rates
The standard corporate tax rate is 30%. Small businesses with aggregated turnover under $50 million pay 25%, which lowers the franking credit on their dividends — select the correct rate in the calculator.
Frequently Asked Questions
What is a franking credit?
A franking credit is the tax a company has already paid on the profits behind your dividend. It is attached to franked dividends and reduces the tax you owe as a shareholder.
How do I calculate franking credits?
Franking credit = franked amount × (company tax rate ÷ (1 − company tax rate)). At 30%, a $700 fully franked dividend carries $300 in credits.
Are franking credits refundable?
Yes. If your marginal tax rate is below the company tax rate, the excess franking credits are refunded to you as a cash payment at tax time.
What is a fully franked dividend?
A dividend is fully franked when the company attaches credits for the full corporate tax it paid on the underlying profit. Partially franked dividends carry credits only on the franked portion.
What is the company tax rate for franking?
The standard rate is 30%. Small businesses with aggregated turnover under $50 million pay 25%, which produces smaller franking credits.
How do franking credits reduce tax?
You include the grossed-up dividend (dividend + credits) in your taxable income, then subtract the credits from the tax payable. If credits exceed your tax, the difference is refunded.