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Aus tax law questions relating to companies. Instructions in file.

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TAXATION LAW TUTORIAL QUESTIONS WEEK COMMENCING 26 SEPTEMBER 2016 WEEK 10: COMPANIES 1. Your client has come to you for advice on buying shares in ABC Bank Ltd. The company has made a record profit and has indicated that it will be paying a record dividend that will be fully franked. Your client needs to know whether they should buy the shares in their private company name, their own individual name, in partnership with their spouse or the family trust. The specifically want to know answers to the following questions: What is meant by dividend imputation and what are franking credits? Is there a specific time in which shares must be held before the investor can use the franking credits? If the bank paid a dividend of $3,500 and it was fully franked, how much would need to be included in the taxpayer’s assessable income? What if the $3,500 was franked to 30%? How much assessable income does the taxpayer include? How would the partnership, company and trust treat the receipt of the dividend? Would the amount of assessable income differ? QUESTION 2: (SEMESTER 2 2015 EXAM) XYZ Pty. Ltd. is a small Australian Insurance Company operating in Melbourne. It is an Australian Resident Private Company for tax purposes. The Accounting Profit and Loss Statement for the year ended 30 June 2015 is as follows: Income $ Fees 3,000,000 Less Operating Expenses $ Accounting fees 15,000 Advertising 12,000 Accounting Depreciation (note 1) 15,000 Fringe benefits tax 15,000 Gifts (note 2) 10,000
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