Australia Franking Credits Calculator: Dividend Imputation Gross-Up

Compare Common Scenarios

How the numbers shift across typical situations for this calculator:

How This Calculator Works

Enter the cash dividend you received and the gross-up rate (42.857% for a fully franked dividend at the 30% company tax rate). The calculator shows the franking credit and the grossed-up dividend (cash plus credit). Under dividend imputation, you declare the grossed-up amount as income, then the franking credit is a tax offset against your tax bill — refundable if it exceeds your tax.

The Formula

Percentage Add-On

Rate is the tax or tip percentage applied to the amount

Worked Example

A $700 fully franked dividend carries a $300 franking credit, giving a grossed-up dividend of $1,000. Australia's dividend imputation system avoids double-taxing company profits: when a company pays tax (30% for most companies) and then distributes a 'franked' dividend, it attaches a franking credit for the tax already paid. You include the grossed-up dividend ($1,000 = $700 cash + $300 credit) in your income, calculate tax on it, then subtract the $300 credit — so you're only taxed on the difference between your rate and the company rate, and a low earner gets the excess refunded.

Key Insight

Franking credits are a defining and unusually generous feature of Australian investing, and the gross-up arithmetic is the key to understanding them. The logic: company profits are taxed once at the company level (commonly 30%), and dividend imputation passes that tax on to shareholders as a credit so the same profit isn't taxed twice. A fully franked dividend of $700 represents $1,000 of pre-tax company profit on which $300 of tax was already paid — so you 'gross up' the cash dividend by adding the $300 credit, declare $1,000 of income, work out your tax on it, and then use the $300 as an offset. The powerful part, distinctive to Australia, is that franking credits are refundable: if your marginal tax rate is below the company rate (or you pay no tax, like many retirees and super funds in pension phase), the unused credit is paid to you as a cash refund — which is why franked dividends are especially prized by low-rate investors, SMSFs and retirees. The gross-up rate depends on the company tax rate: 30/70 = 42.857% for the standard 30% rate, or 25/75 = 33.333% for base-rate entities taxed at 25%; and for part-franked dividends you scale by the franking percentage (a 50%-franked dividend gets half the credit). Conditions apply: the '45-day holding rule' requires you to hold the shares at risk for a set period to be entitled to the credits, and there's a small-shareholder exemption below a credit threshold. This calculator shows the franking credit and the grossed-up dividend; for your actual outcome, declare the grossed-up amount, apply your marginal rate, then subtract the credit (refundable if it exceeds your tax), and scale the rate for part-franked dividends.

Refundable credits: why retirees and SMSFs love fully-franked dividends

Australia is one of the only OECD countries where franking credits are FULLY REFUNDABLE — if your franking credits exceed your tax liability, the ATO sends you a cheque for the difference. This is the key feature that makes franked dividends especially valuable for low-rate or zero-rate taxpayers.

Concrete example: an SMSF in pension phase (0% tax) receives a $7,000 fully-franked dividend. The grossed-up amount is $10,000 with $3,000 of franking credits attached. The SMSF declares $10,000 of taxable income, owes 0% tax, and the $3,000 of franking credits is refunded in cash. The fund's effective dividend yield is therefore $10,000 (cash + refund), not $7,000.

Retirees over 60 with self-funded pensions (no salary income) often run close to zero taxable income through judicious use of franking credits, TFSA-equivalent strategies, and tax-free super pension phase. The Labor government's 2019 election loss is widely attributed to its proposal to remove franking credit refundability for some categories — testament to how politically valued these refunds are.

The 45-day holding rule — and the small shareholder exemption

To prevent dividend stripping (buying just before ex-dividend to capture the franking credit, then selling), the ATO requires shareholders to hold the shares 'at risk' for at least 45 days (or 90 days for preference shares) around the dividend date. Days when you've hedged with derivatives or short positions don't count toward the 45 days.

The small shareholder exemption: if your total franking credits across all dividend income in the year is less than $5,000, the 45-day rule doesn't apply. This exemption protects ordinary retail investors who might unknowingly violate the rule when transacting around ex-dividend dates. Practically, you need roughly $16,500+ of grossed-up dividends to exceed $5,000 of credits — most retail investors fall well within this safe harbor.

Strategic implication for active traders: if your franked dividend income approaches or exceeds the $5,000 credit threshold, plan share transactions to ensure 45 calendar days of unhedged holding around the dividend. Selling 44 days after ex-date forfeits the entire franking credit on those shares — a substantial loss.

Partial franking: handling 50%-franked or unfranked dividends

Not all dividends are 100% franked. A dividend is fully franked when the company has fully paid Australian corporate tax on the underlying profits. Foreign earnings, franking account credits running low, and certain corporate actions can result in partly-franked or unfranked dividends.

Calculation for partly-franked: a $1,000 dividend that's 50% franked carries $214 of franking credit (50% × full 30%/70% gross-up of $1,000). The grossed-up taxable income is $1,214 — only the franked portion gets the gross-up. The cash portion still represents Australian-source dividend income but doesn't carry a credit.

Unfranked dividends are common from foreign companies (no Australian corporate tax paid). They're taxed at your marginal rate with no offset credit. ASX-listed REITs often pay 'distributions' rather than dividends — these may be partly tax-deferred capital returns plus partly franked/unfranked income, requiring careful AMIT tax statement reading at year-end.

Franking credit effective benefit by tax rate (fully-franked dividend)

How franking credits play out at different marginal tax rates. A $7,000 cash dividend (fully franked at 30%) carries $3,000 of credits, giving a $10,000 grossed-up taxable amount.

Plus 2% Medicare Levy for most taxpayers (not shown for clarity). For SMSFs and low-rate taxpayers, fully-franked dividends are effectively zero-tax — the most tax-efficient asset class available in Australia.

Frequently Asked Questions

References & Authoritative Sources

• ATO — Australian Taxation Office — Franking credits and dividend imputation · consulted May 31, 2026 · Tax authority — gross-up rules, refundability, 45-day rule, small shareholder exemption
• Income Tax Assessment Act 1997 — Division 207 — Dividend imputation system — statutory basis · consulted May 31, 2026 · Federal statute defining franking credits and refundability
• ASIC — MoneySmart — Shares — understanding dividends and franking · consulted May 31, 2026 · Consumer regulator — plain-language guide for retail investors

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