Franking Credit Calculator

Cash Dividend, Credit and Gross-Up

A cash dividend is the amount the company distributes before any withholding. A franking credit is company tax attached to the franked share of that dividend. The grossed-up dividend combines the cash and the credit for tax purposes.

Use the paying company’s corporate tax rate for imputation purposes. If the statement gives the rate, use that figure. If it only gives the cash and credit, confirm the rate with the payer. The Australian Taxation Office (ATO) company tax instructions explain how the payer’s imputation rate limits the credit.

How the Franking Credit is Calculated

Apply the imputation rate to the franked share of the cash dividend. In the formula, use decimals for both percentages, such as 0.60 for 60% and 0.30 for 30%.

Franking credit = cash dividend × franked proportion × imputation rate ÷ (1 − imputation rate)

Grossed-up dividend = cash dividend + franking credit

Take a fictional $1,247.85 cash dividend at a 30% imputation rate. At 100% franking, $1,247.85 × 1 × 0.30 ÷ 0.70 gives $534.79 in credit. Add it to the cash for a grossed-up dividend of $1,782.64.

At 60% franking, $748.71 of the same dividend is franked. Multiply that amount by 0.30 and divide by 0.70 to get a $320.88 credit. The grossed-up dividend is $1,568.73. At 0% franking, the credit is $0.00 and the grossed-up dividend stays at $1,247.85.

What the Recipient Can Claim

For an eligible Australian resident individual, the grossed-up dividend goes into assessable income and the credit can reduce tax as a franking tax offset. If the offset exceeds the tax payable, the excess can be refunded to an eligible individual. See the ATO’s guidance for individual shareholders.

An eligible company can use the offset to reduce its income tax to zero. For an ordinary company recipient, excess offsets generally turn into an equivalent tax loss for a future year under the ATO’s company offset and loss rules.

Entitlement depends on the recipient and the circumstances of the dividend. The holding-period rule generally requires you to hold ordinary shares at risk for at least 45 days, excluding the acquisition and disposal days. Some preference shares require 90 days.

If you pass the dividend benefit to someone else or agree to do so, the related payments rule tests the holding period around the ex-dividend date. Small shareholder exceptions and integrity rules such as dividend washing can also affect entitlement. The figures above check the statement arithmetic. Eligibility for an offset or refund requires those separate checks.

Check the Dividend Statement

1. Add the statement’s franked and unfranked cash amounts. In the 60% example, $748.71 plus $499.14 gives $1,247.85. Compare the deposit after allowing for any withholding shown.
2. Enter the franking percentage shown on the statement. If it only lists the amounts and the total cash is above zero, divide the franked cash by the total cash and multiply by 100.
3. Compare the calculated credit with the attached credit on the statement. For example, $320.87 on the statement is one cent below the calculator’s $320.88. Check whether the payer rounded each parcel separately or reported a rounded percentage.
4. Use the statement’s credit for the reconciliation. Here $1,247.85 plus the stated $320.87 gives a statement-based grossed-up amount of $1,568.72. If the difference persists, ask the payer to confirm the amounts and rate.

The ATO’s dividend statement guide lists the figures to look for. Enter a cash dividend from $0 to $1 billion and a franked proportion from 0% to 100%. The imputation rate can be 0% or higher and must stay below 100%. The calculator displays amounts up to $22,517,998,136,852.48 to the cent.