Franking credits calculator
Gross up an imputed dividend, work out the tax on it, and see whether the credits leave a refund.
Extra tax on the dividend
Estimate$350.00
an effective 33.5% on the grossed-up amount
- Franking credit
- $3,000.00
- Grossed-up dividend
- $10,000
- Tax on the dividend
- $3,350.00
| Cash dividend | $7,000.00 |
|---|---|
| Franking credit | $3,000.00 |
| Grossed-up dividend | $10,000 |
| Tax | -$3,350.00 |
| Payable | -$350.00 |
A $7,000 fully franked dividend at a 30% company rate carries $3,000 of credits, grossing up to $10,000.
How this is calculated
How this is calculated
Imputation grosses the dividend up
Where a company has already paid tax on the profit, the credit restores it: dividend × rate ÷ (1 − rate). At a 30% company rate a $7,000 dividend carries $3,000, grossing up to $10,000.
credit = franked dividend × rate ÷ (1 − rate)The grossed-up amount is what gets taxed
Your marginal rate applies to the full $10,000, and the $3,000 credit is then applied against the resulting tax. At 32% that leaves $200 payable rather than $3,200.
Refundability varies
Australia pays excess credits in cash, which makes fully franked dividends unusually attractive below a 30% effective rate. Most other systems cap the benefit at the tax you owe.
Worked example: $7,000 of imputed dividends
| Dividend | $7,000 |
|---|---|
| Franked | 100% |
| Credit | $3,000 at a 30% company rate |
|---|---|
| Refundable? | Depends on your country |
Whether excess credits are refunded in cash or merely offset tax owing is the single biggest difference between imputation systems.
What this assumes
- Any minimum holding period is met.
- Dividends are from resident companies.
- No foreign tax offsets apply.
- Full-year residency in the selected country.
Where this commonly goes wrong
- Minimum holding periods usually exclude the days you buy and sell, and small-shareholder exemptions have a ceiling.
- A partly franked dividend carries only part of the credit, which is easy to miss on a statement.
- Credits attach at the company’s own tax rate, so a small company generates a smaller credit on the same cash dividend.
Questions
What is dividend imputation?
A system that credits shareholders for company tax already paid on the profit behind a dividend, so it is taxed once at the shareholder’s rate rather than twice. Australia and New Zealand both use it.
Why is the dividend grossed up?
Because your tax is calculated on the pre-company-tax profit, not the cash you received. A $7,000 dividend with a $3,000 credit represents $10,000 of profit, and that is the figure the rate applies to.
Are excess credits refunded?
In Australia, yes — the excess is paid in cash, which is why franked dividends suit low-rate investors and pension-phase super funds. Most other systems only let credits reduce tax you already owe.
Related tools
Sources
General estimate based on published ATO rates for the the current period. Not tax advice, and it does not consider your objectives, financial situation or needs. Confirm your position with the ATO or a registered tax agent.
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