Franking Credits Calculator
Enter a dividend and your taxable income. This tool shows the franking credit attached, the grossed-up amount you declare, the tax at your marginal rate, and the bottom line: a cash refund or a top-up to pay. New to the idea? Start with our plain-English guide, franking credits explained.
The straight answer
A $700 fully franked dividend carries a $300 credit — the company tax already paid — and your rate decides whether that comes back as cash or you owe a top-up. Below $18,200 the whole credit is refunded; the refund is real money, not a paper offset.
Estimate only — general information, not financial or tax advice. Assumes you are an Australian resident and ignores the Medicare levy surcharge, HECS/HELP and offsets other than LITO. Confirm with the ATO or a registered tax agent.
Refunds are real cash: for Australian resident individuals, franking credits are fully refundable.
How a franking refund actually lands
If the credits are bigger than the tax on your grossed-up income, the ATO pays you the difference after you lodge — even if you owe no tax at all (ATO, FY2025-26). That is why low-income investors and retirees often receive franking refunds each year.
The 45-day rule: hold the shares at risk for at least 45 days.
The 45-day fine print and the $5,000 exemption
To claim the credit you generally must hold the shares “at risk” for at least 45 days (90 days for certain preference shares), not counting the day you buy or the day you sell. Individuals whose total franking credits are under $5,000 for the year are exempt from the holding period rule under the small shareholder exemption (ATO integrity rules, FY2025-26).
What this calculator does
A franked dividend arrives with the company tax already paid.
- Company pays tax 30% comes off the profit before you see it
- Dividend lands cash in your account, franking credit attached
- You declare the gross-up cash dividend plus credit, as income
- Credit offsets your tax bigger than the extra tax = refund; smaller = top-up
What the tool does behind the scenes
When a company pays you a franked dividend, it has already paid company tax on the profit behind it. The dividend arrives with a franking credit (also called an imputation credit) — a voucher for that tax. At tax time you declare the grossed-up amount (cash dividend plus credit) as income, then claim the credit back as a tax offset. This calculator does that whole loop for you: it works out the credit, adds the grossed-up amount to your income, asks the same tax engine as our income tax calculator how much extra tax that creates, and nets the two off. If the credit is bigger than the extra tax, you get a refund; if it is smaller, you owe a top-up.
Exactly how it’s calculated
The franking credit formula is: credit = dividend × (company rate ÷ (1 − company rate)) × franking %.
For the tax side, it does not just multiply by a bracket rate.
Why it computes tax with and without the dividend
It computes your full tax bill (including the 2% Medicare levy and the low income tax offset, LITO — a small offset that reduces tax for incomes under $66,667) on your income with and without the grossed-up dividend, and takes the difference. That is the correct marginal method: it catches bracket crossings, the LITO taper and the Medicare levy phase-in that a simple “32% of the dividend” shortcut misses. Your net position = franking credit − extra tax. The tax engine uses the ATO resident rates for FY2025-26, and FY2026-27 with the legislated 16% → 15% cut (ATO).
Why the marginal rate decides everything
A fully franked dividend has effectively been taxed at 30% already.
So whether you get money back depends on how your personal rate compares.
| Taxable income | Your rate vs the 30% already paid | Outcome |
|---|---|---|
| $0–$18,200 | 0% | The whole credit comes back as a refund |
| Around $45,000–$135,000 | Roughly 32% incl. Medicare levy — slightly above 30% | Typically a small top-up |
| Top bracket | 45% plus 2% Medicare levy | The biggest top-up — though the credit still covers 30 points of the tax |
The point: franking credits don’t make dividends tax-free; they make sure the profit is taxed once, at your rate.
See the glossary for the jargon, and franking credits explained for worked examples.
The key caveats
This is an estimate for a resident individual holding shares directly.
Every caveat, and where to go next
The estimate also covers shares held via a simple trust distribution. It ignores the Medicare levy surcharge, HECS/HELP repayments (a HELP debt is a higher education loan repaid through the tax system — our income tax calculator handles it), other offsets, and the 45-day rule’s fine print. Dividends themselves are never guaranteed — companies can cut or cancel them at any time, and past dividends are no indicator of future ones. If you’re weighing dividend investing against other uses of your money, our mortgage vs invest tool, the pay off the mortgage or invest? guide and the investing hub are good next steps; investing in ETFs in Australia covers how franking flows through exchange-traded funds, and debt recycling explained covers a more advanced strategy. More explainers live in Learn.
Your call
If your taxable income is under $18,200 and you hold franked shares, the credits are fully refundable — the ATO's refund-of-franking-credits form exists for exactly that, and it's your cash they're holding. At every other income, the credit sets what a dividend is really worth at your rate — that's the number above — but it says nothing about whether the company is worth owning. A weak business paying franked dividends is still a weak business; the franking changes the tax, not the quality. Run the number, then weigh the company on its own merits — that part's your call.
Frequently asked questions
What are franking credits?
Franking credits (also called imputation credits) are a record of the company tax already paid on the profits behind your dividend. Australian companies pay tax on profits, then attach a credit for that tax when they pay dividends. You count the credit as income, but you also get it back as a tax offset — so the profit ends up taxed once, at your personal rate, instead of twice. (ATO, FY2025-26.)
Why is a franked dividend grossed up?
Grossing up means adding the franking credit to your cash dividend so your tax return shows the full pre-tax profit, not just the after-company-tax cash. The ATO calls this the gross-up and credit approach: you declare dividend plus credit as income, then claim the credit back as a tax offset. It looks odd, but it is what makes the system fair — everyone is taxed on the same pre-tax amount at their own marginal rate.
Who gets a refund of franking credits?
For Australian resident individuals, franking credits are fully refundable. If the credits attached to your dividends are bigger than the tax you owe on the grossed-up amount — common for people below the tax-free threshold, part-time workers and retirees with low taxable incomes — the ATO refunds the difference in cash after you lodge a return or a short refund-of-franking-credits application. (ATO, FY2025-26.)
What is the 45-day holding rule?
To claim a franking credit you generally must hold the shares “at risk” for at least 45 days (90 days for certain preference shares), not counting the day you bought or sold. There is a small shareholder exemption: individuals whose total franking credits for the year are under $5,000 can ignore the holding period rule, though the related payments rule still applies. (ATO franking credit integrity rules, FY2025-26.)
Why do some companies frank at 25% instead of 30%?
The standard company tax rate is 30%, but base rate entities — companies with aggregated turnover under $50 million where no more than 80% of assessable income is passive income like interest, rent and dividends — pay 25%, and 25% is also their maximum franking rate. Most large ASX-listed companies frank at 30%; many smaller private companies frank at 25%, so the credit attached to each dollar of dividend is smaller. (ATO, FY2025-26.)
Sources
- ATO — Refund of franking credits for individuals (credits fully refundable; eligibility & integrity rules).
- ATO — Receiving dividends and other distributions (the gross-up and credit approach).
- ATO — Franking credit trading (integrity rules) (45-day holding period rule; $5,000 small shareholder exemption).
- ATO — Changes to company tax rates (30% standard; 25% base rate entity: turnover under $50m, ≤80% passive income; maximum franking rates).
- ATO — Tax rates for Australian residents (FY2025-26 brackets used by the tax engine).
- ATO — New tax cuts for every Australian taxpayer (16% → 15% from 1 July 2026, Treasury Laws Amendment (More Cost of Living Relief) Act 2025).
General information only — an estimate, not financial, tax, credit or legal advice. Rates verified against ATO sources for FY2025-26 (reviewed July 2026). Confirm your own position with the ATO or a registered tax agent.