Franking Credit Calculator

The Franking Credit Calculator works out the tax story behind an Australian dividend: the franking credit attached to it, the grossed-up amount you must declare, and — if you add your other taxable income — whether the dividend leaves you with a refund, a top-up tax bill, or neither. It handles fully and partially franked dividends at either Australian company tax rate.

How It Works

When an Australian company pays tax on its profit and then distributes the rest as a dividend, the tax already paid travels with the dividend as a franking credit, so the same profit is not taxed twice. The credit is recovered from the cash dividend by reversing the company tax:

$\text{Franking Credit} = \text{Cash Dividend} \times \frac{\text{Company Tax Rate}}{1 - \text{Company Tax Rate}} \times \text{Franking \%}$

$\text{Grossed-Up Dividend} = \text{Cash Dividend} + \text{Franking Credit}$

You declare the grossed-up amount as income, are taxed on it at your personal rates, and then claim the credit back as an offset. The calculator computes that tax impact exactly as the difference between your Australian tax (resident brackets plus the 2% Medicare levy) with and without the grossed-up dividend stacked on your other income. Credit bigger than the tax → the ATO refunds the excess. Tax bigger → you pay the top-up.

Worked Example 1: The Credit Itself

A fully franked cash dividend of $7,000** from a company taxed at **30$7,000 × (30 ÷ 70) = $3,000**, and the grossed-up dividend is **$10,000 — the pre-tax profit your dividend came from. At the 25% base-entity rate the same $7,000 cash carries a credit of$7,000 × (25 ÷ 75) = $2,333.33. A **50$1,500, for a grossed-up amount of $8,500.

Worked Example 2: A Refund

Your other taxable income is **$40,000** and you receive that same$7,000 fully franked dividend (grossed-up $10,000, credit$3,000). Tax on $50,000 minus tax on$40,000 = $6,788 −$4,288 = **$2,500** of tax attributable to the dividend. The credit is$3,000, so you are refunded $500**, your net cash becomes$7,000 + $500 = **$7,500, and the effective tax rate on the dividend is $2,500 ÷$10,000 = 25% — your true marginal cost after imputation.

Worked Example 3: A Top-Up

Same dividend, but your other income is $150,000**. The tax attributable to the grossed-up dividend is now$43,738 − $39,838 = **$3,900, because it stacks into the 37% bracket plus Medicare. Against the $3,000 credit you owe a **$900 top-up**, and the effective rate on the dividend is 39%. Same company, same dividend, opposite outcomes — imputation makes the shareholder's bracket, not the company's, the final word.

If you leave income blank, the calculator illustrates the dividend at the company rate itself, which for a fully franked dividend is exactly neutral: tax equals credit, no refund, no top-up.

Limitations

The tax engine uses the resident individual brackets (16/30/37/45 cents) with the Medicare levy applied above an approximate $26,000 threshold; it does not model the low-income tax offset, Medicare levy reductions, HELP debts, or non-resident rates, so borderline incomes will differ slightly from an ATO assessment. It treats one dividend at a time and does not handle the 45-day holding rule or franking credit trading rules that can deny credits. For a portfolio, run each dividend and sum — or use the figures as the working for your tax agent.

Frequently Asked Questions

Why do I declare more income than the cash I received?

Because the grossed-up amount is the true pre-tax profit earned on your behalf. The system taxes you on the full $10,000 but hands you the$3,000 credit for the tax the company already paid — declaring only the $7,000 cash and still claiming the credit would double-count the benefit.

Are excess franking credits really refundable?

Yes, for Australian resident individuals and complying super funds: if your credits exceed your tax payable, the ATO pays the difference back with your assessment. That refundability is what makes franked dividends especially valuable to low-income shareholders and pension-phase super funds taxed at 0%.

Does a 25% company rate make its dividends worse?

The credit is smaller because less tax was paid — $2,333.33 on$7,000 cash instead of $3,000 — but the grossed-up income is also smaller ($9,333.33 instead of $10,000). After the offset, what matters is still your own marginal rate versus the company rate, not the headline credit.