Question 3 (10 marks)

Gold Pty Ltd is an Australian resident private company. All the shares in Gold Pty Ltd are owned by Johnny Gold.

During the year ended 30 June 2019 the following events occurred in relation to Gold Pty Ltd:

1 July 2018 Opening balance of franking account $200,000

2 July 2018 Payment of dividend franked to 70% $1,600,000

28 October 2018 Payment of income tax for Gold Pty Ltd $600,000

26 November 2018 Receipt of dividend from another company

franked to 80% $450,000

31 December 2018 Refund of income tax for Gold Pty Ltd $750,000

22 February 2019 Receipt of dividend from another company

franked to 50% $430,000

2 March 2019 Payment of dividend franked to 30% $600,000

31 March 2019 Payment of income tax for Gold Pty Ltd $250,000

2 April 2019 Payment of fully franked dividend $700,000

4 April 2019 Payment of Goods & Services Tax $50,000

30 June 2019 Payment of dividend franked to 40% $550,000

Using the information provided above, prepare the Franking Account for Gold Pty Ltd for the year ended 30 June 2019:

Required:

1. Calculate the over franking tax (if any) that Gold Pty Ltd is liable to pay (5 Marks)

2. Calculate the franking deficit tax (if any) that Gold Pty Ltd is liable to pay (5 Marks)