Calculate the franking account and tax payable by Otago Pty Ltd. Frank is a director of Otago
Question:
Calculate the franking account and tax payable by Otago Pty Ltd.
Frank is a director of Otago Pty Ltd (Otago), an Australian resident private company, with acorporate tax rate for imputation purposes for the 2020/21 income year of 30%.
Frank provided you with the following information regarding the company's franking account:
1 July 2021: Opening balance $500 credit.29 July 2021: Paid 2020 tax year fully franked final dividend $7,000
28 February 2021: Paid 2021 tax year 60% franked interim dividend $9,00030 April 2021: Received fully franked dividend from Australian company $4,500
28 June 2021: PAYG installment paid relating 2020/21 tax year totaled $1,20030 June 2021: Declared a fully franked dividend of $10,000
Otago had a taxable income of $16,000 for 2020/21.
Required
1) Prepare Otago Pty Ltd.'s franking account for the 2020/21 tax year and explain any consequences arising from the franking account balance at 30 June 2021.
2) Calculate net tax payable (refundable) for the company.
Managing the Law The Legal Aspects of Doing Business
ISBN: 978-0133847154
5th edition
Authors: Mitchell McInnes, Ian R. Kerr, J. Anthony VanDuzer