Australian Franking Credit Calculator

Franking credits (also called imputation credits) represent the tax a company has already paid on profits before distributing them as dividends to shareholders. Australia's dividend imputation system, introduced in 1987, prevents the double taxation of company profits.

How the Imputation System Works

When an Australian company pays corporate tax on its profits, it can pass on a credit for that tax to shareholders when paying dividends. This means:

• Fully franked dividends: 100% of the dividend has an attached franking credit
• Partially franked dividends: Only a portion has franking credits attached
• Unfranked dividends: No franking credits attached (0% franked)

The franking credit formula depends on the company tax rate and the franking percentage of your dividend.

The Franking Credit Formula

Company Tax Rates

The franking credit amount depends on the company's tax rate:

• 30% rate: Standard corporate tax rate for most companies
• 25% rate: Base rate entity rate for companies with aggregated turnover under $50 million

When completing your Australian tax return, you need to declare the grossed-up dividend amount (not just the cash received) and claim the franking credit as a tax offset.

Key Points for Tax Time

• Report the grossed-up dividend as assessable income
• Claim the franking credit as a tax offset
• If your marginal tax rate is lower than the company rate, you may receive a refund
• Your dividend statement will show the franking credit amount

Excess Franking Credits

If your franking credits exceed your tax liability, you may be entitled to a refund of the excess. This is particularly beneficial for:

• Low-income earners in lower tax brackets
• Retirees and pensioners
• Self-managed super funds (SMSFs) in pension phase