Maximum Franking Credit For 2020/21

James Murphy Tax


I know that the small company tax rate will be reduced to 26% from the year 2021/22. So far, the company has franking account balance on 30/06/2020 as below:

Total profit $190,000    Tax (27.5%): $52250 all paid.

If the company wants to distribute $100,000 profit to its shareholders(two),

In this case, it is my understanding that the franking credit (FC) will be $27500.

Can the company pay more than the amount (27.5k)?

In 2021/22, when the company distributes the previous profit (90k), do I use 26% or 27.5 for the FC?

It is honestly very confusing for me to calculate the franking credit. 


If you distribute a $100,000 (50k each)  as a net dividend to its two shareholders, the situation for each shareholder (if 50% each) will be as follows:

Net dividend                                      $50,000

Franking credit                                   18,965.50

Taxable dividend                            68,965

The franking credit reflects the 27.5% company tax rate.

After 1.7.2021 we expect the franking credit rate will be 26% and this has been confirmed in the May Federal Budget.