Pania Biddle owns 500 shares in Mainfreight Ltd (MFT), a company listed on the New Zealand Stock Exchange (NZX). MFT keeps an imputation credit account as required under tax law. On 1 June 2020, MFT declared a fully imputed final dividend of 34 cents per share to be paid to shareholders on 17 July 2020.

Calculate:

• (i) The total imputation credits attached to the dividends Pania will receive.
• (ii) The total RWT on the dividends.
• (iii) The total net dividends Pania will be paid.
• (iv) The total gross dividend.

Simon and Samantha are planning to set up a LTC and have asked you for some advice on LTCs. They are in particular not sure about what a LTC is and the benefits of operating a business as a LTC. They are also interested in finding the tax treatment of LTCs and the tax consequences of electing into the LTC regime as they are currently operating their business as an ordinary company.

QuestionAssume that Simon and Samantha currently operate their business as an ordinary company with tax losses of $40,000 and wish to elect into the LTC regime. Explain what tax consequences may arise if the company elects into the LTC regime.