Question

A resident company pays a partly franked dividend of $700 (80% franked) to a resident shareholder....

A resident company pays a partly franked dividend of $700 (80% franked) to a resident shareholder. Explain the Income Tax implications of the shareholder if he/she is: (a) an Individual who is subject to the Top Marginal Tax rate. (b) an Individual with Marginal Tax rate of 15%. (c) a company with other Assessable Income of $100,000 and a carried forward loss of $40,000. (d) a company with other Assessable Income of $88,000 and deductions of $7,000. (e) a partnership with two (2) resident Individual partners sharing partnership profits or losses equally.

Homework Answers

Answer #1

(a) Individual who is subject to Top Marginal tax Rates:-

Particulars Amount
Income from Other Sources:-
Dividend Received 700 -
(since co. had already paid dividend distribution tax the above dividend shall be exempt in hands of shareholders)

(b)Individual who is subject to Tax @ 15%

Same as case (a)

(c)Company with other Assessable Income $100000:-

Particulars Amount
Income from Other Sources:-
Other assessable Income 100000
Less:- Carried Forward Losses 40000 60000
Dividend 700
Total Income 60700
Tax @ 30% (dividend is exempt in hands of shareholders) 18000

d)Company with other Assessable Income $88000:-

Particulars Amount
Income from Other Sources:-
Other assessable Income 88000
Dividend 700
Gross Total Income 88700
Less-Dividend 7000
Total income 81700
Tax @ 30%(Except On Dividend) 24300
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