Dolaro

ETF Returns Calculator Australia

Model your ETF portfolio growth, distribution tax, CGT, fee drag, and real returns — all in one calculator.

Your Details

ETF Preset

Return rates are historical averages and not a guarantee of future performance.

Your investment

$
$
1 yr40 yrs
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%
%
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Your tax details

Comparison ETF (optional)

Results

Final Portfolio Value

$334,856

after 20 years · DRIP on

After CGT (full sale)$294,909
Real value (today's dollars)$204,353

Growth breakdown

Total contributions$130,000
Capital growth$139,281
Distributions received (gross)$65,575
Tax paid on distributions− $20,431
Franking credit benefit$8,431
Total fees paid (MER)− $4,984

Fee drag

At 0% MER$343,147
Fees cost you$8,291

CGT on full sale

Capital gain$204,856
50% CGT discount applied− $102,428
CGT payable$39,947
After-CGT proceeds$294,909

Return rates used are historical averages and not a guarantee of future performance. Tax calculations are estimates based on the inputs provided. Not financial or tax advice — consult a qualified adviser before making investment decisions.

Portfolio growth over 20 years

Portfolio balance
Contributions
Growth

Fee drag visualisation

Fees cost you $8,291 over this period (shaded gap)

With MER
No fees (0%)

Tax summary

Year 1 distribution$400
Year 1 tax on distributions$125
Year 20 distribution$7,765
Year 20 tax on distributions$2,419
Total distributions (gross)$65,575
Cumulative franking credits$8,431
Total tax on distributions− $20,431
CGT on full sale− $39,947
Total tax over period$60,378
Effective tax rate on total returns22.3%

Fee drag — $100,000 over 20 years at 8% gross

MERFinal value
0.00%$466K
0.07%$460K
0.19%← yours$450K
0.27%$443K
0.50%$425K
1.00%$387K

$100k lump sum, no contributions, same return rate.

Lump sum vs DCA

Compares investing your total planned contribution ($130,000) all at once on day 1 vs spreading it via your regular contributions.

Your DCA strategy

$334,856

Lump sum (same total)

$584,957

Winner

Lump sum beats DCA by $250,101 — investing earlier means more time in the market. Note: assumes a constant return rate. In practice, lump sum generally outperforms DCA in rising markets.

How long to reach my goal?

Enter a target portfolio value to see when you'll hit it at your current settings.

$

At these settings, you won't reach $1,000,000 within 20 years. Your final balance is $334,856. Try increasing your contributions, return rate, or investment period.

How ETF returns are calculated in Australia

An ETF's total return has two distinct components: capital growth (the rise in the ETF's unit price) and distributions (income paid out periodically — usually quarterly or annually). These are taxed completely differently.

Capital growth is not taxable until you sell. Distributions are assessable income in the financial year they are paid — whether you reinvest them or not. This distinction is critical for tax planning: holding an ETF for longer defers CGT (and qualifies you for the 50% discount), but distribution tax is unavoidable each year.

The MER (Management Expense Ratio) is deducted daily from the fund's NAV (Net Asset Value) — it never appears as a direct charge on your brokerage statement. But it silently reduces the return the fund earns before it reaches you. Because it compounds against your growing balance, a 0.27% MER costs far more over 20 years than it appears at first glance. This calculator shows the exact dollar drag.

How ETF distributions are taxed

Each year, an ETF distributes income from dividends, interest, and sometimes realised capital gains from securities the fund sold internally. These distributions are your assessable income for that financial year.

If the distribution includes franking credits (from Australian companies that already paid 30% corporate tax), you must gross-up the distribution and then offset the franking credit against your tax. The formula: Franking credit = (Cash distribution × Franking %) ÷ (1 − 0.30) × 0.30. The credit reduces your tax bill — and if your effective tax rate is below 30%, you receive an ATO refund for the difference.

DRIP doesn't avoid distribution tax. The ATO treats reinvested distributions identically to cash distributions — you owe tax on the grossed-up amount in the year it was paid. The cost base of your new units is set to the reinvestment price.

Capital Gains Tax on ETFs

CGT is triggered only when you sell ETF units (or units are redeemed). Day-to-day unrealised growth is not taxed. When you sell, the capital gain is calculated as: Sale proceeds − Cost base, where cost base = total amount you paid for the units (including all purchases and DRIP reinvestments at their acquisition price).

If you held the units for more than 12 months, the 50% CGT discount applies — only half the gain is included in your taxable income. For a $100,000 capital gain at a 37% marginal rate, the discount reduces CGT from $37,000 to $18,500. The 50% discount is the single most powerful tax concession for ETF investors.

Strategies to reduce CGT: hold for 12+ months (always), consider selling in a low-income year, use tax-loss harvesting to offset gains with other losses, or hold ETFs in superannuation where the CGT rate is 10% (post 12 months, in accumulation phase).

The fee drag effect

A 0.20% MER sounds negligible. On a $500,000 portfolio it's $1,000/year — not trivial. But the real damage is compounding: the $1,000 not earned in fees also doesn't compound in future years. Over 20 years at 8% gross return, the difference between a 0% MER and a 0.50% MER on a $100,000 lump sum is substantial:

MERETF example$100k after 20 yrsFee cost
0.00%Hypothetical$466,096—
0.04%IVV$462,485− $3,611
0.07%VAS / A200$459,759− $6,337
0.19%DHHF$449,300− $16,796
0.27%VDHG / VDAL$442,085− $24,011
0.50%Active funds$422,717− $43,379
1.00%Managed funds$380,613− $85,483

$100,000 lump sum at 8% gross return over 20 years. Values are illustrative.

Frequently asked questions — ETF returns

What return rate should I use for my ETF?

Historical long-run returns for diversified Australian/global ETFs are approximately 8–10% per year before tax and fees. DHHF has returned approximately 9.5% annualised since inception. VGS has returned approximately 10–11% annualised over the past decade. These are historical figures and not a guarantee of future returns. Most financial planners use 7–8% as a conservative planning assumption.

Are ETF distributions taxed differently from dividends?

ETF distributions include multiple components — unfranked income, franked dividends, capital gains distributed from within the fund, and sometimes tax-deferred amounts. Each component is taxed differently. The total taxable amount from a distribution is typically more than the cash you receive because of the grossed-up value of franking credits. Your annual ETF tax statement (also called a Managed Fund Tax Statement) breaks these down — you enter each component in your tax return.

Does reinvesting distributions (DRIP) avoid tax?

No. Even if you reinvest distributions, you owe tax on the grossed-up distribution amount in the financial year it was paid. The ATO treats reinvested distributions as income received and then immediately invested — you still pay the distribution tax. The benefit of DRIP is compounding growth, not tax avoidance.

What is the 50% CGT discount and when does it apply?

If you hold an ETF for more than 12 months before selling, only 50% of the capital gain is included in your taxable income. This effectively halves your CGT rate. For example: if you have a $50,000 capital gain and your marginal rate is 37%, without the discount you'd owe $18,500. With the discount, only $25,000 is taxable — reducing your CGT to $9,250. The 50% discount is one of the most valuable tax concessions available to Australian investors.

How are franking credits calculated?

Franking credits represent tax already paid by the Australian company at the 30% corporate tax rate. The formula: Franking credit = (Cash dividend × Franking %) / (1 − 30%) × 30%. For a $100 fully franked distribution: grossed-up amount = $100 / 0.70 = $142.86. Franking credit = $42.86. If your marginal rate (including Medicare) is 32%, tax on $142.86 = $45.71. Less the $42.86 franking credit = $2.85 net tax. At marginal rates below 30%, you receive a refund from the ATO.

What is MER and how much does it matter?

MER (Management Expense Ratio) is the annual fee charged by the ETF provider, expressed as a percentage of your balance. It is deducted from the fund's returns automatically — you never write a cheque for it, but it reduces the fund's net asset value daily. A 0.27% MER on a $200,000 portfolio is $540/year. Because it compounds against your balance over decades, the total drag over 20–30 years is significantly larger than it appears — this calculator shows the exact dollar impact under your inputs.

Should I use DRIP or take distributions as cash?

DRIP (Distribution Reinvestment Plan) lets you automatically reinvest distributions into additional units, compounding your holding without brokerage costs. It is generally better for long-term accumulation investors. Taking distributions as cash makes sense if you are in a drawdown phase (using the ETF for income), if you want to use the cash to rebalance your portfolio, or if you want to direct the cash to reduce other debt (like a mortgage). Note that DRIP does not defer or avoid tax on distributions.

Does lump sum or DCA perform better?

Research consistently shows that lump sum investing outperforms DCA in rising markets approximately two-thirds of the time, because money in the market earlier has more time to compound. However, DCA reduces the risk of investing a large amount just before a market downturn. For most long-term investors with regular income (salary), DCA via automatic monthly contributions is the practical approach — and this calculator shows exactly what that results in for your specific settings.

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This calculator uses simplified tax modelling based on the inputs provided. Distribution tax calculations use the grossed-up method with franking credit offsets. CGT uses the 50% discount method where applicable. Real-world distributions include multiple components (unfranked income, franked dividends, fund-level capital gains) that this calculator does not disaggregate. Always consult a registered tax agent or financial adviser before making investment or tax decisions. Not financial advice.