How the calculator works
- Franking credit = cash dividend × franked % × company rate ÷ (1 − company rate). For a fully franked dividend at 30% that is 3/7 of the cash amount.
- Grossed-up dividend = cash dividend + franking credit. This is what you add to your taxable income.
- Tax on the dividend = tax on your income plus the grossed-up dividend − tax on your income alone.
- Refund or top-up = franking credit − tax on the dividend. A positive number comes back to you as a refund.
Worked example
A retiree's only income is $20,000 of fully franked dividends in 2026–27.
Franking credits are $8,571, so the grossed-up dividend is $28,571. Tax on that after the low income tax offset, plus the Medicare levy, is $912 — leaving a refund of $7,660. The $20,000 of dividends is worth $27,660 after tax.
Someone earning $120,000 in wages with the same dividends pays $10,093 tax on them, so they owe $1,521 top-up tax on top of the credits.
Refund or top-up? It depends on your tax rate
| Taxable income (2026–27) | Rate incl. Medicare | Fully franked at 30% |
|---|---|---|
| Up to $18,200 | 0% | Full credit refunded |
| $18,201 – $45,000 | 17% | Part refund |
| $45,001 – $135,000 | 32% | Small top-up (2%) |
| $135,001 – $190,000 | 39% | Top-up tax |
| Over $190,000 | 47% | Top-up tax |
Source: ATO resident tax rates. Rates shown before the low income tax offset and Medicare levy low-income reduction.
Frequently asked questions
What is a franking credit?
It's the company tax already paid on the profits behind your dividend. You add it to your income (grossing up the dividend) and then use it to pay your own tax on that income.
Are franking credits refundable?
Yes, for Australian resident individuals. If your credits are more than the tax on your grossed-up dividends, the ATO refunds the difference — which is why retirees and low-income investors often get money back.
Who pays top-up tax?
Anyone whose marginal tax rate plus the 2% Medicare levy is above the company rate. On a fully franked dividend from a 30% company, someone earning over $45,000 pays the 2% levy as top-up, and someone earning over $135,000 pays more.
Why are some dividends franked at 25%?
Smaller "base rate entity" companies pay 25% company tax, so their dividends carry credits worked out at 25%. Your dividend statement shows the franking credit for each payment.
What is the 45-day rule?
To claim franking credits you generally must hold the shares "at risk" for at least 45 days (90 for preference shares), not counting the days you buy and sell. It does not apply if your total franking credits for the year are $5,000 or less.
Do the 2027 tax changes affect franking credits?
No. The 2027 reforms change capital gains tax and negative gearing; dividend imputation is unchanged. The new $250 Working Australians Tax Offset from 2027–28 is included for people with salary or wages.