Learn about debt recycling strategies and how our calculators can help optimize your financial decisions.
The Debt Recycling Calculator shows you the potential financial advantage of debt recycling, a strategy that involves using spare cash to pay down a split home loan, then redrawing those funds to invest in income-producing assets. By inputting your financial details you can see how much tax you can save, and how much your investments can grow over time by applying a debt recycling strategy versus a standard repayment strategy.
Whether you're starting fresh or already have debt recycling in place, our calculator accommodates your situation. Simply enter any existing debt recycling amount along with your new investments to get accurate projections and tax calculations.
Franking credits are essentially tax refunds from Australian companies. When Australian companies pay corporate tax (30%) on their profits before paying dividends to shareholders, they attach "franking credits" representing the tax already paid.
Example: If you receive $70 in fully franked dividends, the company actually earned $100 but paid $30 in tax. You get the $70 dividend plus a $30 franking credit, totaling $100 of taxable income. If your tax rate is 37%, you pay $37 tax on the $100, but get the $30 franking credit back, so you only pay $7 net tax.
Why this matters for debt recycling:
Debt recycling example with franking credits:
Result: Franking credits boost your annual benefit from $370 to $1,126 - that's an extra $756 per year!
In our calculator: Set your Australian shares percentage (30% is typical) and franking rate (70% average) to see the combined benefit of debt recycling + franking credits.
Here are some excellent guides on debt recycling: