Franking Credits Calculator Australia (FY2025–26)

Understanding Dividend Imputation in Australia

Australia's dividend imputation system is one of the most investor-friendly tax structures in the world. Unlike most countries where shareholders pay full personal income tax on dividends regardless of how much company tax was already paid, Australia prevents this double-taxation by attaching franking credits to dividends.

When an Australian company pays 30% corporate tax on its profits and then distributes those profits as dividends, it can "frank" those dividends by attaching credits representing the tax already paid. Shareholders then gross up the dividend (add the credit back), include the larger amount as taxable income, and receive a tax offset equal to the credit.

The net result: shareholders pay tax at their personal marginal rate on the full pre-tax company profit, with the corporate tax already paid counting as a credit toward that liability. If your marginal rate is below the company rate, you get the difference back as a cash refund.

Franking Credits at EOFY: What Investors Need to Know

At the end of each financial year (30 June), Australian investors who hold shares and receive dividends need to include all franked and unfranked dividends in their tax return, along with the associated franking credits.

• ATO pre-fill: From early July, myTax pre-fills dividend and franking credit data reported by share registries and brokers. Always verify these figures against your own statements — processing delays mean some data may not appear until August or September.
• Eligible to claim if you pass the 45-day rule:To be entitled to a franking offset, you must hold the shares "at risk" for at least 45 days (90 days for preference shares) around the ex-dividend date. Short-term traders who buy and sell around the dividend date may not qualify.
• Refundable excess credits: If your total franking credits exceed your income tax liability (including Medicare levy), the excess is refunded in cash when you lodge. This benefit is particularly valuable for retirees, low-income earners, and super funds.
• Portfolio tracking: Keep a record of ex-dividend dates and dividend reinvestment plan (DRP) amounts — DRP shares are treated as income at their market value on the allotment date and can include franking credits, even though no cash is received.

Worked Example: Fully Franked Dividend

An investor with a $80,000 salary receives a $700 fully franked dividend from a large ASX company (30% company tax rate).

• Cash dividend: $700
• Franking credit: $700 × (30/70) = $300
• Grossed-up dividend (assessable income): $1,000
• Marginal tax rate at $80,000 income: 32.5%
• Tax on grossed-up dividend: $1,000 × 32.5% = $325
• Less franking credit offset: −$300
• Additional tax owed: $25
• Effective tax rate on the $700 cash dividend: 3.6%

Compare this to an investor with $20,000 in salary receiving the same dividend:

• Marginal rate at $20,700 income: 19% (on amounts above $18,200)
• Tax on grossed-up dividend: approximately $56
• Less franking credit: −$300
• Excess credit refundable: $244 refund

The low-income investor not only pays no tax on the dividend — they receive a $244 cash refund, making fully franked Australian shares extremely tax-efficient at lower income levels.