During the 2020/21 income tax year, Brilliant Ltd, a resident company, received a dividend distribution of $900,000 from another Australian resident company, Call Saul Ltd. The dividend distribution of was 80% franked. Assume the company tax rate applicable to both Brilliant Ltd and Call Saul Ltd is 26%. 

(a) Is Brilliant Ltd required to maintain a franking account? What is the purpose of maintaining a franking account?  

(b) What are the total tax consequences for Brilliant Ltd from receiving the 80% franked$900,000 distribution from Call Saul Ltd?

Answer rating: 100% (QA)

a Yes Brilliant Ltd is required to maintain a franking ... View the full answer