Franked vs Unfranked Dividend Calculator (Australia)

Franked vs unfranked dividends, after tax

The franked vs unfranked comparison is the single most misread number in Australian income investing. Two shares can advertise the same dividend yield and deliver very different amounts to your bank account, because one comes with a credit for tax the company has already paid and the other does not. This calculator settles the question by running both dividends through your actual tax position and reporting what you keep.

You enter the cash dividend, the franking percentage, your other taxable income, and whether the paying company is on the full company tax rate or the lower base rate. The tool returns the franking credit, the grossed-up dividend, the tax on each version, and the difference in after-tax value.

How dividend imputation works

Australia does not tax company profits twice. When a company pays tax on its earnings and then distributes those earnings, the tax it already paid is passed on to shareholders as a franking credit. You add the credit to the cash dividend to get the grossed-up amount, declare that grossed-up amount as income, and then subtract the credit from your tax bill.

The arithmetic falls out of one formula. The credit equals the dividend multiplied by the company rate divided by one minus the company rate, scaled by the franking percentage. At the full company rate, a fully franked A$700 dividend carries a A$300 credit and grosses up to A$1,000, exactly the pre-tax profit the company started with.

An unfranked dividend has been through no such process. It is ordinary income, taxed at your full marginal rate with nothing to offset it. The same A$700 in cash is worth noticeably less.

The part that makes Australia unusual

In most countries an imputation credit can reduce your tax to zero and no further. In Australia the credit is refundable. If the credit exceeds your entire tax liability for the year, the Australian Taxation Office pays you the difference in cash.

That single rule reshapes the comparison at the bottom of the income scale. A retiree with no other taxable income who receives a A$700 fully franked dividend pays no tax on the A$1,000 grossed-up amount, because it sits under the tax-free threshold, and receives the full A$300 credit as a refund. The dividend is worth A$1,000 to them, not A$700. The same person receiving A$700 unfranked keeps A$700 and no more.

Run those figures through the calculator with other income set to zero and you will see it: a franking advantage of A$300 on a A$700 dividend, or nearly 43 per cent.

The break-even rate

The tool reports a break-even marginal rate, which is simply the paying company's tax rate. It is the pivot the whole comparison turns on:

• Below the company rate , part of the company tax comes back to you. The lower your rate, the more of it you recover, up to the full credit at a zero rate.
• At the company rate , the tax on the grossed-up dividend exactly equals the credit, so the franked dividend attracts no further tax at all.
• Above the company rate , you top up the difference between your rate and the company rate. You still pay less than you would on an equivalent unfranked dividend, because the credit already covers the first slice.

Even at the top marginal rate plus the Medicare levy, a fully franked dividend leaves you meaningfully better off than an unfranked one of the same cash size. The advantage shrinks; it never reverses.

Comparing two shares honestly

The advanced comparison basis switches the tool from comparing equal cash dividends to comparing an unfranked dividend equal to the grossed-up amount. Set it that way and the after-tax figures land on top of each other, which is the point: the grossed-up amount is the true like-for-like figure.

This is how to read a yield table. A share paying a 4 per cent fully franked yield has a grossed-up yield of about 5.7 per cent at the full company rate. Comparing it against a 5 per cent unfranked yield and concluding the second is better is simply wrong; the franked share is ahead for almost every investor.

Partial franking sits between the two. A 50 per cent franked dividend carries half the credit a fully franked one would, and the tool handles any percentage between zero and 100. Companies with substantial foreign earnings, recently listed companies, and property trusts often pay partly franked or unfranked distributions for entirely legitimate reasons.

What the comparison leaves out

A dividend is one part of a return. Chasing franking credits into concentrated positions in a handful of banks and miners has cost Australian investors more in capital losses than it ever returned in credits, and no tax calculator can price that risk for you.

There are also mechanical limits. The 45-day holding rule requires you to hold the shares at risk for a set period before you can claim the credits, so credits harvested by buying just before an ex-dividend date and selling straight after are generally denied. Investors whose total franking credits stay under a small annual threshold are exempt from that rule. Franking credits attached to distributions from trusts and managed funds flow through with their own timing quirks, and non-residents cannot claim them at all.

The calculator also assumes resident individual rates for a full year, ignores the Medicare levy surcharge, and takes your other income as fixed. It does not model a superannuation fund in pension phase, where the effective tax rate on earnings is zero and franking credits are refunded in full.

Reading your result

The headline figure is what the franked dividend is worth to you after tax. Below it sit the unfranked equivalent, the difference between them, the credit itself, and the amount of that credit refunded in cash rather than merely offset. The tax rate on the grossed-up dividend tells you the real rate the distribution bore, and the break-even rate tells you where the balance would tip.

Treat every figure as an estimate for comparing options, not as the number that will appear on your notice of assessment. Deductions, other offsets, capital gains, and the holding period rules all move the final answer. This is general information, not personal tax or investment advice; speak to a registered tax agent or licensed adviser before acting on it.

About This Tool: Franked vs Unfranked

Franked vs unfranked: use this tool to get an instant, accurate estimate. The figures follow official ATO guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.