Monsters Inc Pty Ltd is a real estate agency which also acts as property manager for rental properties. The company also owns some commercial units which are currently leased. It also has equity interests in a number of key business partners which provide services to the business.

The accounts show the following income and expenses:

Receipts $

Dividends from Blue Door Limited franked to 100% received on 24 March 2020. Franking credits of $3,686 were attached. 8,600

Dividend from Extractor Limited franked to 60% received on 14 November 2019. Franking credits of $4,793 were attached. 18,640

Commissions from sales of property 659,250

Rental income 82,600

Lease premium 23,450

Management fees 285,000

Expenses

General operating expenses (deductible under 8-1) 253,621

Wages and salaries 462,150

Superannuation 41,500

Provision for annual leave 35,550

(Actual leave taken was $23,000)

Provision for doubtful debts 10,000

(Actual debts written off totalled $5,100).

Interest on loan 47,500

The 6-year loan was used to purchase the commercial units. Borrowing expenses had totalled $5,400 and had been paid on 1 June 2019. Interest on the loan was $2,500 per month, payable on the first day of each month. Interest was paid monthly until 1 February 2020 when interest was prepaid for 12 months.

Notes:

The company was established 7 years ago by Sulley and his friend Mike Wazowski owning all the shares jointly. Last year Mike Wazowski became ill and sold his 50% shareholding to Boo.

Included in the wages and salaries is an amount of $50,000 paid to Sulleys wife Celia. Celia spends 2 hours a day in the office doing general office duties. The Commissioner considers that $15,000 would be reasonable.

The company has capital losses of $17,620 carried forward from the 2019 year.

The company paid the following PAYG (Instalments) during the year:

28 July 2019 Fourth instalment of 2019 tax 12,000

28 October 2019 First instalment of 2020 tax 17,400

28 February 2020 Second instalment of 2020 tax 19,000

28 April 2020 Third instalment of 2020 tax 20,400

28 July 2020 Fourth instalment of 2020 tax 14,600

According to its dividend policy it paid 2 dividends on 1 December 2019 and 1 June 2020. The first dividend was $92,840 and was franked to 75% while the second dividend was $100,000 and was franked to 100%. The opening balance in the franking account was a credit of $3,000.

Required:

1. Calculate the taxable income and net primary tax payable for the year ended 30 June 2020 assuming its classified as a Base Rate Entity (BRE). The company wanted to use the SBE concessions where available.

2. Prepare the franking account for the current year and calculate any tax and/or penalty payable.

Answer Must be done using Australia Tax Law standards only.