Dividend Franking Credit Calculator
This dividend franking credit calculator will estimate the amount of Franking Credit (Imputation Credit) on your cash dividend in Australia.
According to ATO, "Franking credits arise for shareholders when certain Australian-resident companies pay income tax on their taxable income and distribute their after-tax profits by way of franked dividends. These franked dividends have franking credits attached. Franked dividends are received either directly as a shareholder or indirectly as a beneficiary of a trust."
Calculator assumptions:
(1) The Personal Tax Rate does not include Medicare Levy and Temporary Budget Repair Levy.
(2) Rounding: The value is rounded to at least the nearer cent where applicable.
How to Calculate Franking Credits
The franking credits on your dividends can be calculated using this formula:
Franking Credits = ( Dividend / ( 1 - Company Tax Rate ) - Dividend ) * Franking Percentage
Since the full company tax rate is 30% the above formula can be simplified as:
Dividend * ( 3 / 7) * Franking Percentage
How Franking Credits Affect Your Tax
The table below shows how the franking credits affect the after tax dividend income of 5 investors on different personal tax rates. They all receive a $700 of fully franked dividend with $300 of franking credits. This means they will have the same $1,000 of taxable income. However, from the table below you can see that their after tax dividend incomes are all different!
| Investor 1 | Investor 2 | Investor 3 | Investor 4 | Investor 5 | |
|---|---|---|---|---|---|
| Dividend | $700 | $700 | $700 | $700 | $700 |
| Franking Credit | $300 | $300 | $300 | $300 | $300 |
| Taxable Dividend Income | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 |
| Personal tax rate | 0% | 16% | 30% | 37% | 45% |
| Tax Payable before Franking Credit | $0 | $160 | $300 | $370 | $450 |
| Tax owed (refunded) after franking credit | ($300) | ($140) | $0 | $70 | $150 |
| After Tax Dividend Income | $1,000 | $840 | $700 | $630 | $550 |
Basically if your personal tax rate is higher than 30%, you need to make up the difference between it and the 30% tax the company has already paid. If your personal tax rate is lower than 30%, the difference between it and the 30% tax will be refunded by ATO if you don’t have any other taxable income or it will be used to offset the tax on your other taxable income.