Calculator
Franking Credit / Dividend Imputation Calculator
Franking Credit Calculator
Dividend Income
Total cash dividends from your dividend statement for the period (annual is easiest).
Big-four banks, BHP and Telstra typically pay 100% franked; some REITs and international listings pay 0%.
Your Tax Position
Pick the top rate on your taxable income plus the 2% Medicare Levy. Below 30% → refund territory; above 30% → top-up tax.
Net After-Tax Dividend Income
$4,821.43
Franking Analysis
Your 32.5% marginal rate is above the 30% company tax, so a small top-up applies. The $2,142.86 of credits attached to your $5,000 dividend offset most of the tax on the grossed-up amount of $7,142.86, leaving $178.57 payable. Net after tax: $4,821.43.
Educational tool. This calculator applies Australia's dividend imputation rules using a flat marginal rate you select — your true outcome depends on your full tax return, other income, and offsets like the Low Income Tax Offset. Refundable franking credits apply to individuals and super funds (with conditions). Not tax advice; see a registered tax agent for your situation.
What Franking Credits Are and Why Australia Has Them
Franking credits are Australia's fix for the double taxation of company profits. When an ASX-listed company pays tax at the corporate rate (30% for large companies, 25% for qualifying small businesses) and then distributes those profits as dividends, the Australian tax system does not tax the same income twice. Instead, the company attaches 'franking credits' — representing the tax it has already paid — to each dividend. Shareholders gross the dividend up by the credit amount, declare the gross figure as income, and claim the credits as a tax offset. For Australian retail investors this is one of the most powerful income features in the local market, and a key reason the big four banks, BHP, Telstra and Woolworths are staples of retirement portfolios. The credits are refundable: if your marginal rate is under 30% — most retirees, students, and low-income investors — the ATO sends the difference back as a cash refund. Higher earners pay only a top-up to their marginal rate. A fully franked 4% dividend effectively becomes around 5.7% of pre-tax company profit, which is why dividend imputation shapes nearly every ASX income strategy, SMSF asset choice, and retirement income plan in the country. This calculator turns any dividend amount and franking percentage into the credits attached, the tax outcome at your rate, and your true after-tax income.
How the Gross-Up and Credit Math Works
The imputation formula is fixed by the company tax rate. For a 30%-taxed company, a cash dividend of D carries franking credits of D × 30/70, because the dividend represents 70 cents of every dollar of pre-tax profit. The calculator uses this gross-up factor (100/70) on the franked portion of your dividend — set by the franking percentage slider — so a $5,000 fully franked dividend carries $2,143 of credits and a grossed-up income of $7,143. Tax then works in three steps. First, the grossed-up amount is taxed at your marginal rate. Second, the franking credits are subtracted dollar-for-dollar as a tax offset. Third, the result settles the bill: if the credits exceed the tax on the grossed-up income, the excess is refundable and the ATO pays it to you; if the tax exceeds the credits, you pay the top-up. At a 30% marginal rate the two match exactly, so no extra tax and no refund. The calculator reports the net after-tax income — cash dividend plus any refund, or minus any top-up — which is the number that belongs in your budget. Partially franked dividends are handled by scaling credits to the franked share only, with the unfranked portion taxed as ordinary income with no offset.
Expert Insights
Franking Makes ASX Dividend Yields Misleading
A quoted 4% dividend yield on a fully franked ASX share understates the real return for low-income investors, who receive the yield plus a refundable credit that pushes gross-equivalent income above 5.7%. It also understates the pre-tax profit the company earned to pay you. When comparing ASX income to overseas dividend payers, always gross up: an unfranked 5% international dividend is genuinely less tax-efficient than a fully franked 4.3% Australian one for anyone below the top bracket.
Retirees Should Optimise Around Refundability
Inside an SMSF in pension phase, investment earnings are tax-free — and franking credits attached to dividends are fully refundable, creating a direct cash stream on top of dividends. This is one of the most generous features of the Australian super system, and a major reason retirees hold ASX dividend payers rather than international shares. In accumulation phase, credits offset the 15% fund tax. Outside super, a retiree with taxable income under $18,200 converts every franked dollar into more cash in hand, including the refund.
Watch for Unfranked Distributions
Not every distribution carries credits. A-REIT distributions, some ETF income, and dividends from companies with insufficient franking credits arrive unfranked and are taxed in full at your marginal rate. A 6% unfranked yield at a 37% bracket leaves roughly 3.8% after tax; the same yield fully franked leaves over 5%. Checking the franking percentage before buying — and in dividend statements after — is a three-second habit that protects your yield assumptions.
Actionable Tips
- 1
Read the Distribution Statement, Not Just the Yield
Every dividend payment carries a franking percentage and credit dollar amount on your broker or registry statement, and companies publish it in their distribution announcements. Enter the exact figures rather than assuming 100% — even the big banks occasionally declare partially franked dividends, and trusts almost always differ. Accurate inputs keep your tax return and this calculator aligned.
- 2
Pair Dividends With Super to Maximise Credits
If you contribute shares or cash to super, the franking benefits compound: inside accumulation the 15% tax is mostly offset by credits, and in pension phase credits come back as cash. For investors with income below the top brackets, holding franked payers in super rather than personally often converts a small top-up tax into a full refund. Run this calculator at both your personal rate and at 15% to see the difference before deciding where to hold a position.
- 3
Include the Refund in Your Retirement Budget
Many retirees forget that franking refunds arrive with their tax return, often as a lump of several thousand dollars. Budget the refund as part of annual income rather than a windfall — it is a predictable consequence of holding franked shares at a low marginal rate. Conversely, high earners should budget for the June top-up tax on franked income rather than being surprised by it at assessment.
Real-World Examples
Margaret's Refund Funds Her Trip
Margaret, 68, retired with $400,000 in ASX dividend payers yielding a fully franked 4.5%, producing $18,000 cash a year. Her taxable income sits under the tax-free threshold, so the $7,714 of franking credits attached to those dividends come back as a full refund. Her real income is $25,714 — over 6% of her portfolio — and she uses the refund every year to fund a trip. For Margaret, franking isn't a tax technicality; it's her travel budget.
David Times His Top-Up
David, 45, earns $160,000 and holds $250,000 of bank shares yielding 4% fully franked — $10,000 cash plus $4,286 of credits. His 37% marginal rate plus the 2% Medicare Levy means the grossed-up $14,286 attracts tax of $5,571, less the $4,286 credit, so he owes a $1,285 top-up. His after-tax dividend income is $8,715, still better than an unfranked 4% which would leave $7,900. Knowing the top-up in advance, he sets it aside from each dividend rather than scrambling at tax time.
The Lims Choose Shares Over Unfranked Income
The Lim family, in the 32.5% bracket, compared a 6% unfranked A-REIT distribution against a 4.8% fully franked bank dividend. On $50,000 invested, the A-REIT paid $3,000 and attracted $975 of tax, netting $2,025. The bank paid $2,400 plus $1,029 of credits; after gross-up and the small top-up at 32.5%, the net was $2,352. The franked option won by 16% purely on tax treatment, which reshaped the couple's income portfolio toward fully franked ASX payers.
Glossary of Terms
- Franking Credit
- A tax credit attached to a dividend, representing company tax already paid on the underlying profits, used to prevent double taxation.
- Grossed-Up Dividend
- The cash dividend plus its attached franking credits — the pre-tax profit figure declared as assessable income before the credit offset is applied.
- Dividend Imputation
- The Australian tax system under which company tax paid is 'imputed' to shareholders as credits, so profits are effectively taxed once at the shareholder's rate.
Frequently Asked Questions
Everything you need to know about this topic.
Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the Australian tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.