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QUESTION 17 For the year ended 30 June, Restaurants Pty Ltd had a tax loss of $70,000
QUESTION 17
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For the year ended 30 June, Restaurants Pty Ltd had a tax loss of $70,000. Its assessable income totalled $100,000 and its deductions totalled $170,000. Included in the assessable income was a partly franked dividend of $20,000 made up of $17,000 received and a franking credit of $3,000.
What is Restaurants Pty Ltd carried forward tax loss?
Nil as companies cannot carry forward losses
$73,000
$87,000
$70,000
$80,000
QUESTION 14
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In relation to the application of Division 7A of the ITAA36, which of the following is incorrect?
The amount of the deemed dividend is limited to the company’s distributable surplus
The deemed dividend is subject to withholding tax
The recipient is deemed to receive a dividend which is assessable under section 44 of the ITAA 36
Division 7A applies in priority to FBT in respect to loans and debt forgiveness
The deemed dividend is not frankable
Expert Solution
17 Carry forward tax loss = tax loss + franking credit
=70,000 + 3,000 = $ 73,000
The tax loss carried forward is limited to 80% of the total income = 80% of $ 100,000 = $ 80,000
Since $ 73,000 is below limit, the entire loss of $ 73,000 can be carried forward.
ANSWER:
All the above statements are correct except for statement 4 which says The deemed dividend is not frankable.
There is no such clause into Division 7A of ITAA36 which presents the above statement as true.
Hence the statement 4 is incorrect.
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