Free calculator — 2025–26 tax brackets
Franking Credit Calculator
See how Australian dividend imputation works for your tax bracket — including whether you get a cash refund from the ATO on your franking credits.
Net tax on dividend
$20
$700 cash + $300 credit = $1,000 grossed-up
Effective tax rate
2.0%
Equiv. unfranked
$1,000
Estimates only. Based on 2025–26 Australian tax brackets. Not financial advice.
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See how franking credits, ETF income, and your tax position combine into a long-term investment plan.
See my full plan →How Australia's franking credit system works
Australia uses a dividend imputation system — one of the most generous to investors in the developed world. When a company earns $100 profit and pays $30 in corporate tax, it can distribute the remaining $70 as a cash dividend. But crucially, it also passes the $30 tax credit to shareholders. You declare $100 as income (the grossed-up amount), pay tax at your marginal rate, then subtract the $30 already paid.
For investors below the 30% corporate tax rate — anyone earning under roughly $45,000 — this results in a net tax refund. The ATO pays back the difference between the 30% credit and your lower personal rate. For investors above 30%, the credit offsets most of the tax, with only the excess rate remaining to pay. Either way, you are never taxed twice on the same company profit.
Use the tax return calculator to model how your dividends, franking credits, and other income combine into your overall refund or bill for the year.
Frequently asked questions
What is a franking credit?
Australian companies pay 30% corporate tax before distributing dividends. A franking (imputation) credit represents that tax already paid. When you receive a fully franked dividend, you receive the cash dividend plus a franking credit — and you declare both as income. You then offset the credit against your personal tax bill. This prevents the same income being taxed twice: once at the corporate level and again at your personal rate.
Can I get a cash refund of franking credits?
Yes. If your franking credits exceed your total tax liability, the ATO refunds the difference in cash. This is unique to Australia's imputation system. A low-income investor (below the tax-free threshold) who receives fully franked dividends gets a cash refund equal to the full 30% credit — effectively turning a 30% tax into a 0% tax with extra cash returned. This makes Australian dividend investing particularly tax-effective at lower income levels.
What does 'fully franked' mean?
A fully franked (100%) dividend means the company paid Australian corporate tax at the full 30% rate on the income underlying the dividend. You receive the maximum imputation credit. A 50% franked dividend means only half the underlying income was taxed at 30% in Australia — perhaps because the company earned some income overseas or in lower-taxed activities. An unfranked dividend (0%) carries no credit, and you pay tax at your full marginal rate on the cash received.
How do franking credits affect high-income investors?
For investors in the top tax bracket (45% + 2% Medicare levy), franking credits still provide a partial offset. You declare the grossed-up dividend, pay your 47% marginal rate on it, then subtract the 30% credit — so your net rate on the dividend is 17%. Without franking, you'd pay 47% on the cash. The credit doesn't eliminate tax, but it significantly reduces the effective rate for all investors.
Do I need to do anything to claim franking credits?
No separate claim is required. When you lodge your tax return via myTax or through a tax agent, your broker or share registry reports your dividend income and franking credits to the ATO. They appear pre-filled in myTax from late July. The ATO automatically applies the offset and refunds any excess. Keep your dividend statements as backup documentation.
Can I claim franking credits from an ETF?
Yes. When an ETF holds Australian shares that pay franked dividends, it passes the franking credits through to investors via its annual distribution. The ETF's distribution statement shows the cash component and the franking credit component. You declare both on your return and receive the same offset or refund as if you held the shares directly. The level of franking depends on how much of the ETF's portfolio is invested in Australian shares paying franked dividends.