Franking Credits Calculator
Work out the actual extra tax or refund on a franked dividend at your marginal rate, including the 25% base-rate-entity company rate.
Australia runs a full (not partial) imputation system: franking credits attached to a fully franked dividend equal the corporate tax already paid, and a resident individual shareholder gets a 100% credit for that tax, refundable in cash if it exceeds their total tax payable (since 2000). underlyingCorporateRate=0.25 (the 'base rate entity' rate) is used as the PRIMARY figure because most owner-operator contractor/small companies qualify: aggregated turnover under $50 million AND no more than 80% of assessable income is base-rate-entity passive income (rent, interest, dividends, royalties, capital gains, etc.). Companies that fail either test — larger businesses, or passive/investment-heavy companies — pay the standard 30% rate, in which case dividends they pay are franked at 30%, giving a bigger credit per dollar of dividend; this 30% alternative is NOT separately modelled by a second underlyingCorporateRate here (the schema allows only one) but should be surfaced as a toggle in the UI. Non-resident shareholders receive the franking credit against Australian tax on the dividend but cannot get a cash refund of any excess, and no further dividend withholding tax applies to the fully franked portion.
How franking credits actually reduce your tax
Australia runs a full imputation system: when a company pays tax and then distributes a franked dividend, the franking credit attached represents the company tax already paid on that profit. A resident individual shareholder gets a full credit for that tax against their own tax bill — and if the credit is worth more than their total tax payable, the excess is refunded in cash, not just carried forward.
For most owner-operator contractor or small companies, the relevant company tax rate is the 25% base rate entity rate, which applies where aggregated turnover is under $50 million and no more than 80% of assessable income is passive (rent, interest, dividends, royalties and similar). Companies that fail either test pay the standard 30% rate instead, and their dividends carry a bigger franking credit per dollar as a result.
How to use this calculator
- Enter the dividend amount and its franking percentage
- Select the company tax rate that applies (25% base rate entity, or 30% standard)
- Add your other taxable income so your marginal rate is used
- Review the actual extra tax payable, or refund due, once the franking credit is applied
