Hi there, quick simple franking account scenario.
Let's say year one in operation as a PTY LTD. We received $10,000 of franking credits, once i apply them to my gross tax of $8,000 i am left with a refund of $2,000.
Am i right in assuming the with the opening franking account @ 0, the closing franking account would be $8,000 (the franking credit minus the refund)?
Thanks!
Assuming gross tax was determined after adding 10 K to taxable income at Item 7 J if F credit was from franked dividends - but not if from P or T distributions.
See Form C instructions
For most companies, the amount of franking credits included at label J is allowable as a tax offset and should be claimed in the Calculation statement at label C Non-refundable non-carry forward tax offsets.
So there is no refund of 2000.
Am i right in assuming the with the opening franking account @ 0, the closing franking account would be $8,000 (the franking credit minus the refund)?
No
Assuming gross tax was determined after adding 10 K to taxable income at Item 7 J if F credit was from franked dividends - but not if from P or T distributions.
See Form C instructions
For most companies, the amount of franking credits included at label J is allowable as a tax offset and should be claimed in the Calculation statement at label C Non-refundable non-carry forward tax offsets.
So there is no refund of 2000.
Am i right in assuming the with the opening franking account @ 0, the closing franking account would be $8,000 (the franking credit minus the refund)?
No
Thanks Bruce.
Yes let me be more clear in the example.
J - Franking Credit of $10,000 has been added/grossed up into taxable/net income (6-T or CalcStatement A).
Let's say that total is $15,000 (T).
From there we get Gross tax of $3,750 (T1 & B) (25% base rate).
My understanding is that from here, you then apply the franking credit to Non-refundable non-carry forward tax offset (C).
$10,000 (franking credit) - $3,750 (gross tax) = $6,250.
Individuals get this refunded back to them. but i believe PTY LTD can only use this excess to convert into a tax loss to apply back or forward.
is that wrong?
In terms of what to enter as franking account opening (P) & closing (M) balance. I would have thought 0 would be the opening balance. Closing would be $3,570 ? (Your franking credit net of your refund?)
Then H excess franking offsets would be $6250?
Thanks!
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