Partially Franked Dividend
A dividend where only part of the underlying profits have been taxed in Australia, so only partial franking credits are attached.
A partially franked dividend is one where the company has paid Australian company tax on only a portion of the profits being distributed. This means some franking credits are attached, but less than the maximum amount. For example, a 50% franked dividend of $70 from a company taxed at 30% would carry $15 in franking credits (half the maximum $30), with $35 being franked and $35 being unfranked.
Partially franked dividends are common for companies that earn a mix of Australian and international income, or companies that have some tax concessions or offsets reducing their effective tax rate below the statutory rate. Mining companies with significant overseas operations or companies receiving R&D tax incentives may pay partially franked dividends.
For tax purposes, you include the cash dividend plus the franking credit in your assessable income, and claim the franking credit as a tax offset. Using the example above: assessable income = $70 + $15 = $85, with a $15 tax offset. The franking percentage is stated in the dividend statement your company or fund provides, and your tax software or tax agent will calculate the correct grossed-up amount and offset.
How it works
A partially franked dividend sits between fully franked and unfranked: the company has paid Australian company tax on only part of the profit behind the distribution, so only a proportional franking credit is attached. A dividend franked at 50% carries half the maximum credit that a fully franked dividend of the same size would carry, with the remainder treated as unfranked. The franking percentage is set at the company level, based on how much of its profit was actually taxed in Australia.
In practice, your dividend statement states both the cash amount and the franking percentage, and from those you calculate the attached credit and the total assessable amount — cash dividend plus credit. Your tax software or tax agent handles this calculation automatically once you enter the statement's figures, applying the credit as a tax offset against your overall tax bill in the same way a fully franked credit would apply, just at a smaller scale.
Partially franked dividends are common among companies with a mix of Australian and international earnings, such as miners with significant overseas operations, or companies whose effective tax rate has been reduced below the standard rate by concessions like R&D tax incentives. A frequent mistake is assuming a dividend is either fully franked or fully unfranked — checking the actual franking percentage on the statement is essential, since it directly changes both your assessable income and your available offset.
Example: a 50% franked dividend from a 30%-taxed company
A shareholder receives a $140 cash dividend, franked at 50%, from a company taxed at the 30% company tax rate. If the $140 were fully franked, the maximum credit would be $140 × 30/70 = $60.
At 50% franking, only half that credit applies: $30. So $70 of the dividend is treated as franked (carrying the $30 credit) and $70 as unfranked. The shareholder's assessable income is $140 + $30 = $170, with a $30 tax offset.
Calculate it yourself
Open calculator →Related Terms
Franking Credits (Imputation Credits)
Tax credits attached to dividends representing company tax already paid on the profits, preventing double taxation.
Fully Franked Dividend
A dividend where the company has paid the full company tax rate on the underlying profits, with maximum franking credits attached.
Unfranked Dividend
A dividend paid from profits on which no Australian company tax has been paid, so no franking credits are attached.
Company Tax Rate
The flat rate of tax applied to company profits — 25% for base rate entities (turnover under $50 million) and 30% for others.