Question

Melbourne Awesome Ltd supplies a wide range of folding bicycles. Melbourne Awesome Ltd derives Australian sourced income for the current tax year comprising net income from trading of $80,000, franked distribution from public companies amounting to $28,000, (carrying an imputation credit of $12,000), unfranked distributions from resident private companies amounting to $25,000 and rental income of $5,500. Melbourne Awesome Ltd also have total deductions (Business Expenses) totaling $55,000. Required: Calculate the net tax payable by All Sports Ltd for the year ended 30 June 2019. (Assume company tax rate is 30%).

Answer 1

For calculation of net tax payable first we need to determine the total income and tax on income which is shown below:-

Total income = Rental income + Franked distribution from public companies + Unfranked distributions from resident private companies + Net trading income

= $5,500 + $28,000 + $25,000 + ($80,000 - $55,000)

= $5,500 + $28,000 + $25,000 + $25,000

= $83,500

Tax on income = Total income * Tax rate

= $83,500 * 30%

= $25,050

Net tax payable = Tax on income - Imputation credit

= $25,050 - $12,000

= $13,050