Franking Credit (Imputation) Calculator (Australia 2026-27)
Calculate Australian franking credits under the dividend imputation system for 2026-27. Grosses up your cash dividend by the franking credit (cash × 30/70 × franking percentage), applies your marginal tax rate plus 2% Medicare Levy, and shows whether the imputation credit is fully refundable (low-rate taxpayers and SMSFs in pension phase) or only offsets income tax (high-rate taxpayers). Includes 45-day holding period rule check and SMSF treatment. Free, private, runs entirely in your browser.
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Source: ATO — Franked Dividends and Imputation Credits + ATO Refund of Franking Credits Instructions. Last updated: May 3, 2026.
What Is the Franking Credit (Imputation) System?
Australia's dividend imputation system, introduced by the Hawke-Keating government in 1987 and made fully refundable in 2000, prevents the double taxation of corporate profits at both the company level and the shareholder level. When an Australian company pays a fully franked dividend, the dividend carries a "franking credit" equal to the company tax already paid on those profits at 30% (or 25% for base rate entities). The shareholder includes both the cash dividend and the franking credit in assessable income (the "gross-up"), then claims the franking credit as an offset against personal income tax. Source: Australian Taxation Office (ato.gov.au).
If the shareholder's marginal tax rate is below 30% (the company tax rate), the imputation credit refunds the difference in cash. If the marginal rate is above 30%, the credit only offsets the additional tax owed on the grossed-up dividend. This makes franked Australian shares uniquely tax-efficient compared to dividends from foreign companies or trusts that distribute unfranked income. Last updated: May 3, 2026.
Gross-Up Math: cash × 30/70 × franking %
The franking credit attached to a fully franked dividend at 30% company tax is calculated as: cash dividend × 30/70 × franking %. The fraction 30/70 (= 0.4286) reflects that company tax was paid at 30% on $1.00 of pre-tax profit, leaving $0.70 of cash to distribute. Working backwards: a $0.70 cash dividend implies $0.30 of corporate tax already paid, so the gross-up is $0.30 / $0.70 = 42.86%. For a base rate entity (≤ $50 million turnover, ≤ 80% passive income) taxed at 25%, the formula becomes cash × 25/75 (= 33.33%). For partially franked dividends, multiply by the franking percentage (e.g., 60%-franked dividend → cash × 30/70 × 0.60).
Example: a retiree receives a $7,000 fully franked dividend at 30% company tax. Franking credit = $7,000 × 30/70 × 100% = $3,000. Grossed-up dividend = $10,000. If the retiree's only income is this $10,000 (well below the $18,200 tax-free threshold), they pay zero tax on the assessable amount and receive a full $3,000 cash refund of the imputation credit — turning a $7,000 cash dividend into $10,000 of after-tax income.
The 45-Day Holding Period Rule
To prevent dividend stripping and franking credit trading, Subdivision F of Part IIIAA of the Income Tax Assessment Act 1936 imposes a 45-day "qualified person" holding period: the shareholder must hold the shares "at risk" for at least 45 days (90 days for preference shares) within the period beginning the day after acquisition and ending 45 days after the ex-dividend date. Days where the shareholder has hedged or shorted the position do not count. Failing the test disqualifies the franking credit entirely — the shareholder still receives the cash dividend but loses the imputation benefit.
A small-shareholder exemption applies if total franking credits across the entire year are less than $5,000 — typically protecting retirees and individual investors with diversified portfolios. For SMSFs and high-balance investors above the $5,000 threshold, careful dividend-period planning is essential. Buy shares more than 45 days before the ex-dividend date, hold them at risk through the ex-date, and avoid hedging strategies that suspend the holding period.
SMSF Pension Phase: 100% Franking Credit Refund
Self-managed super funds (SMSFs) and other complying superannuation funds receive especially favorable treatment. In the accumulation phase, fund earnings are taxed at 15%, so a 30%-franked credit fully offsets the 15% tax and refunds the remaining 15% in cash. In the retirement (pension) phase, fund earnings on assets supporting income streams are taxed at 0%, so the full 30% franking credit is refunded as cash. A pension-phase SMSF holding a $7,000 fully franked dividend receives a $3,000 cash refund directly to the fund — boosting retiree income by 42.86% with no additional fund investment.
Labor proposed in 2018 to abolish the cash refundability of franking credits to non-taxable taxpayers (Bill Shorten's "retiree tax"), but the policy contributed to the 2019 federal election loss and has not been re-tabled. As of 2026-27, full franking credit refundability remains in force. The major risk to the policy is fiscal pressure on the federal budget — but no current government bill threatens it. Pension-phase SMSF investors continue to dominate ASX 200 yield-focused share registers because of this single tax feature.
Frequently Asked Questions
How is a franking credit calculated?
Franking credit = cash dividend × (company tax rate ÷ (1 − company tax rate)) × franking percentage. For a 30% company tax rate this simplifies to cash × 30/70 × franking%. So a $7,000 fully franked dividend at 30% generates a $3,000 franking credit (7000 × 30/70 × 1.00 = 3000). The cash dividend plus the franking credit equals the "grossed-up" amount you include in assessable income.
Are franking credits refundable in Australia?
Yes. Since the Howard government's 2000 reform, franking credits in excess of income tax owed are fully refundable in cash to individual taxpayers and complying superannuation funds. A retiree with no other income receives the entire franking credit as a refund cheque from the ATO. Companies receive the credit as a non-refundable offset only — they can carry forward unused franking offsets but cannot get cash back.
What is the 45-day holding period rule?
Subdivision F of Part IIIAA ITAA 1936 requires shareholders to hold shares "at risk" for at least 45 days (90 days for preference shares) around the dividend-record date to qualify for the franking credit. Hedging or shorting suspends the at-risk count. A small-shareholder exemption applies if your total franking credits for the year are under $5,000 — most retail investors are exempt. Failing the test disqualifies the credit but you still receive the cash dividend.
How does franking benefit pension-phase SMSFs?
A complying SMSF in pension phase pays 0% tax on income from assets supporting retirement income streams. A 30% franking credit attached to a $7,000 dividend is therefore refunded in full as $3,000 cash to the fund, boosting retiree income by 42.86%. This is why retirement-phase SMSFs concentrate heavily in fully franked Australian banks, telecommunications, and resources stocks.
Do non-resident investors get franking credits?
Non-residents cannot claim or refund franking credits, but the imputation system still benefits them indirectly: dividends "to the extent franked" are exempt from Australian dividend withholding tax. So a 100%-franked dividend pays zero withholding, while an unfranked dividend pays 30% (or the lower treaty rate, e.g., 15% for US/UK). This is one of the largest tax advantages of investing in Australian fully-franked income shares from offshore.
What is the difference between 25% and 30% company tax rates?
A "base rate entity" (BRE) pays 25% company tax — defined as a company with aggregated turnover below $50 million and no more than 80% passive income. All other companies (large listed companies, miners, banks) pay 30%. The franking credit gross-up matches whatever rate was actually paid: a 25% BRE generates a 25/75 (= 33.33%) gross-up, while a 30% large company generates a 30/70 (= 42.86%) gross-up. Always check the dividend statement for the actual franking rate applied.
Did Labor abolish the franking credit refund?
No. Labor proposed abolishing cash refundability for non-taxable taxpayers in 2018 (the so-called "retiree tax"), but the policy contributed to the 2019 federal election loss and has not been re-tabled. As of the 2026-27 income year, full franking credit refundability remains intact. There is no current government bill threatening the policy, though long-term fiscal pressure on the federal budget remains a watch-point.