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:

1. (a) an Individual who is subject to the Top Marginal Tax rate. (2 marks)

     (b) an Individual with Marginal Tax rate of 15%. (2 marks)

      (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. (2 marks)

(e) a partnership with two (2) resident Individual partners sharing partnership profits or losses equally.

Answer 1

a) individual subject to top marginal tax rates:

particulars amount

income from other sources-

dividend recieved 700

(since co. had already paid dividend distribution tax the above dividend shall be exempt in hand of shareholders)   

b) individual who is subject to tax @15%

same as case above(a)

c)company with other assesable incvome $100000

particulars amount

income from other sources -

other assessable income 100000

less-carried forword losses 40000

60000

dividend 700

total income 60700

tax @ 30%(dividend is exempt) 18000

d)company with other assessable income $88000

particulars amount

incopme form other sources 88000

other assessable income 700

gross total income 88700

less-dividend 7000

gross total income 81700

tax@30%(dividend exempt) 24300