Question

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.

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