Question

# A resident company pays a \$7,000 fully franked dividend to each of its five shareholders. Explain...

A resident company pays a \$7,000 fully franked dividend to each of its five shareholders. Explain how its shareholders are taxed assuming their relevant details are as follows: - Tom is a resident who has salary income of \$60,000; - Teresa is a resident who has no other income; - R Co is a resident private company that has a tax loss of \$1,000; - Super Co. is a trustee of a complying superannuation fund that has no other income; and - F Co. is a company that is resident in the UK and has no other income.

TOM: SALARY INCOME \$60000

DIVIDEND \$7000

TOTAL INCOME \$67000

Tax on salary income on first \$47630 @15% = \$7144.5

on next \$12370= \$2535.85

Total tax on salary income = \$9680.35

Tax on dividend income @10%=\$700

TERESA: Tax on dividend income @10% =700

since he is resident in canada

R CO. : Since its a resident private company so it is taxed at a special refundable tax of 38 1/3%

Tax on dividend @38 1/3%= \$2683.333

Tax loss can be carried forward

SUPER CO.: Tax on dividend @10%= \$700

F CO.: Since it is a resident in U.K. Dividend is paid to a non resident company should be taxed @25%

Tax on dividend @25% =\$1750