Cero Pty Ltd (Cero) is not a Small Business Entity nor a Base Rate Entity. It has
Question:
Cero Pty Ltd (‘Cero’) is not a Small Business Entity nor a Base Rate Entity. It has an opening balance of 0 (nil) in its franking account. During the 2019/20 tax year, the company recorded the following transactions:
Date | Item | Amount | Franking Credit($) |
1/7/19 | Paid dividend | 350000 | 105000 |
1/8/19 | Received a 90% franked dividend from a Small Business Entity | 30000 | To be calculated |
1/9/19 | Received a 60% franked dividend from a Large ASX listed Company | 400,000 | To be calculated |
1/11/19 | Paid dividend | 700,000 | 300,000 |
Monthly | Monthly PAYG instalments paid | 32,500 | To be calculated |
Monthly | Monthly GST amount paid | 60,000 | To be calculated |
1/3/20 | Paid dividend | 350,000 | 75,000 |
Required
a) Calculate the franking percentages for each of the dividends paid by Cero Pty Ltd during the year ending 30 June 2020.
b) Explain the effect on Cero’s franking account arising from the dividend paid on 1/11/19.
c) Explain the effect on Cero’s franking account arising from the dividend paid on 1/3/20.
d) Calculate the franking credit arising from the dividend received on 1/8/19 and explain the effect of this dividend on Cero’s franking account.
e) Calculate the franking credit arising from the dividend received on 1/9/19 and explain the effect of this dividend on Cero’s franking account.
f) Explain the effect on Cero’s franking account arising from the PAYG instalments paid. .
g) Calculate the closing balance in Cero’s franking account for the year ending 30 June 2020.
h) Explain the consequences (if any) arising from the closing balance you calculated.