Shares vs Mortgage Offset Calculator

Money in an offset account doesn't earn interest — it simply reduces the interest charged on your mortgage. Because you receive no income, there's no tax event. If your mortgage rate is 6% and your marginal tax rate is 37%, the offset gives you an effective 6% tax-free return. To match that from a savings account, you'd need to earn 9.5% before tax.

Australian residents who hold shares for more than 12 months get a 50% capital gains tax discount. Only half the capital gain is added to your taxable income. For example, at a 37% marginal rate, the effective CGT rate on long-term gains is 18.5% (37% × 50%). This calculator applies the CGT discount to unrealised gains at the end of your comparison period.

Australian companies pay 30% company tax before distributing dividends. Franked dividends come with credits for tax already paid. You can use these credits to offset your personal tax. If your marginal rate is below 30%, you may get a refund. Most large ASX stocks pay 70-100% franked dividends, meaningfully reducing the effective tax on dividend income.

It depends on your mortgage rate, tax rate, and actual share market returns. At typical rates of 6%+ and marginal tax of 32.5-47%, the offset is surprisingly competitive because the tax-free benefit is hard to beat. Shares tend to win with lower tax rates, longer horizons, and strong market returns above 8-10%. The breakeven return shown by this calculator tells you exactly what the market needs to deliver.

Both save the same amount of interest, but offset accounts keep your money accessible. Extra repayments are locked away unless you have a redraw facility. If you might need the funds for emergencies or opportunities, an offset account gives you identical interest savings with full liquidity.

This calculator assumes constant interest rates, share returns, and tax rates over the period. Dividends are reinvested after tax. Capital gains tax is calculated as a lump sum at the end (buy-and-hold). Regular mortgage repayments continue unchanged. Real-world outcomes will vary due to market volatility, rate changes, and tax law changes. This is for illustrative purposes only and is not financial advice.