A company earns income of $85,000 in its country of residence (Country A) and income of $25,000 in a foreign country (Country G). Country A subjects resident companies to tax on their worldwide income at the rate of 30%. Country G subjects foreign resident companies to tax on income earned in Country G at the rate 20%. 

Requirement: The way in which the different methods would work to limit double taxation.  

⦁Wales Co is a resident company which in 2021 derived $6.5m of Australian source income and $1.5m of foreign source income. The foreign source income was subject to foreign income tax at the rate of 35%. 

Calculate Wales Co's Australian tax liability, taking into the account of foreign income tax offset.

⦁RR Co is a resident company that pays a dividend of $75,500 (which is franked to the extent of $7,500) to Alison who is a resident of Japan. 

Explain how the withholding tax rules apply to the payment of the dividend.