Australian Investment Calculators

The ASX 200 has delivered an average total return of approximately 9–10% per annum over rolling 20-year periods, including dividend reinvestment. Australian shares carry a distinct tax advantage through the dividend imputation (franking credit) system: Australian companies pay 30% corporate tax on profits, and when dividends are paid, attached franking credits represent tax already paid at the corporate level. Shareholders include these credits in assessable income and receive a corresponding tax offset. For a resident individual in the 32.5% tax bracket receiving a $700 fully franked dividend (carrying $300 in franking credits), the grossed-up income is $1,000, tax owed is $325, and the net refund or offset after the $300 credit is $25 in additional tax, versus $227.50 tax on an unfranked $700 dividend. For investors with low enough taxable income, the excess franking credits are refunded in cash.

Capital gains tax (CGT) in Australia applies to assets sold after 20 September 1985. The critical 12-month rule provides a 50% CGT discount for Australian resident individuals (and trusts) who hold an asset for more than 12 months before sale, cutting the CGT rate in half. For a taxpayer in the 47% marginal bracket (including the 2% Medicare Levy) selling an investment held for 18 months with a $100,000 capital gain, only $50,000 is included in assessable income, resulting in $23,500 in tax rather than $47,000. Companies and superannuation funds do not qualify for the 50% discount; super funds apply their own 1/3 discount (reducing the effective rate to 10%).

Dividend Reinvestment Plans (DRPs) allow shareholders to receive new shares instead of cash dividends, typically at a 1–2.5% discount to market price, with no brokerage. Major ASX blue chips including BHP, CBA, and ANZ offer DRPs. Shares received under a DRP are treated as a new CGT asset at cost equal to the dividend foregone (the market value on the payment date), with the 12-month clock starting from that date. Investment property in Australia benefits from negative gearing, where rental losses can be offset against other income including wages, though the CGT discount still applies on eventual sale.