(a)How are dividends taxed if you are:

(i)a resident shareholder, or

(ii)a nonresident shareholder?

(b)How should the following payments and receipts of a New Zealand resident company be recorded in the company's imputation credit account.

Payment of income tax of $300

Payment of PAYE of $600

Payment of GST of $100

Payment of FBT of $500

Receipt of a $720 dividend, with imputation credits attached of $280

Payment of a $720 dividend

(c) A resident company pays a net $7,200 fully imputed dividend to each of its five shareholders. Work out how each of the shareholders are taxed, assuming the following additional tax information:

Tom is a resident who has salary income of $80,000

Teresa is a resident who has no other income

R Co is a resident company that has a tax loss of $1,000

Super Co is a trustee of a complying trust that has resolved to retain the dividend as trustee income

F Co is a company that is resident in the United Kingdom and has no other income.

(d) A Co owns 20% of the shares in B Co, both of which are New Zealand resident companies. B Co pays A Co a $72,000 dividend, which has $28,000 of imputation credits allocated to it. What are the relevant imputation credit account entries for A Co and B Co? Assuming this is the only receipt of A Co, how much tax will it be required to pay? How would your answer be different if A Co was a non-resident company?

(a)Discuss the different ways in which a company can utilise its tax losses.

(b)What are the key requirements that a company must satisfy to carry forward its tax losses for an income year?

(c) Caleb and Samuel each own 50% of the shares in Co X. The company incurred tax losses of $80,000 for the year ended 31 March 2018. On 1 April 2018 Caleb and Samuel sell half of their shareholding to Amelia and Jane so that the shares in Co X are now owned by the four individuals equally (25% each). The company derives net income of $100,000 for the year ended 31 March 2019. Can the losses of $80,000 be carried forward and offset against the net income for the 2019 income year?

(d) Maurice and Janine own 80% and 20% of the shares in Loss Co respectively. The company incurs a tax loss of $120,000 for the year ended 31 March 2019. Maurice and Janine also hold 60% and 20% of the shares in Profit Co respectively. The remaining 20% of the shares are owned by Louisa. Profit Co derives net income of $150,000 for the year ended 31 March 2019. Both companies are tax resident and carrying on business in New Zealand. No shareholding changes have taken place in either company. Can the losses of Loss Co be offset against the net income of Profit Co for the year ended 31 March 2019?

(e) Discuss the two different methods of offsetting losses between companies which belong to the same group of companies. .