What are franking credits?

Franking credits (also called imputation credits) represent tax a company has already paid on the profits it distributes as dividends. When an Australian company pays a fully franked dividend, it attaches a credit equal to the 30% corporate tax already paid. You include the grossed-up dividend in your taxable income and then receive the franking credit as a tax offset, avoiding double taxation on the same profit.

How much is the franking credit on a $1,000 dividend?

For a fully franked dividend of $1,000, the franking credit is $1,000 × 30/70 = $428.57. This means the company earned $1,428.57, paid $428.57 in company tax (30%), and distributed the remaining $1,000 to you. Your grossed-up taxable dividend is $1,428.57, and you receive a $428.57 tax offset.

Are franking credits refundable?

Yes, for most individual taxpayers and complying superannuation funds, excess franking credits are fully refundable. If your franking credit offset exceeds your total tax liability, the ATO pays the difference to you as a cash refund. This is particularly beneficial for low-income earners and retirees. However, some trusts and certain SMSFs may not be eligible for franking credit refunds under specific ATO rules.

What is the 45-day holding rule for franking credits?

To claim franking credits, you must hold the shares 'at risk' for at least 45 continuous days (90 days for preference shares) during the qualification period — from 45 days before to 45 days after the ex-dividend date. You cannot count the purchase or sale day, and the shares must not be hedged or protected from financial risk during this period. A small shareholder exemption applies if your total franking credits for the year are $5,000 or less.

How do franking credits affect my tax return?

On your tax return, you declare the grossed-up dividend amount (cash dividend plus franking credit) as assessable income. The franking credit is then applied as a tax offset against your total tax liability. If you are on a 30% marginal rate, the offset exactly cancels the tax on the grossed-up amount, so you pay no additional tax. If your marginal rate is below 30%, you may receive a refund. If above 30%, you pay the difference as top-up tax. Your dividend statement from the company or share registry shows the franking credit amount to enter.

Franking Credits Calculator

Calculate franking credits on Australian dividends. See your tax offset, grossed-up income, effective tax rate, and compare results across all marginal tax brackets. Includes refundable credit check for individuals.

Last verified: 1 July 2025

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General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.

Franking Credits Calculator

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