Question

ABC Pty Ltd is an Australian resident private company and on 1 July 2019 its franking account balance was $35,000. ABC paid PAYG instalments of income tax during the year ended 30 June 2020 as follows: 21 July 2019 -- $35,000 21 October 2019 -- $35,000 21 January 2020 -- $35,000 21 April 2020 -- $26,000 A refund of income tax of $22,500 was received by ABC from the ATO on 1 April 2020. ABC paid GST of $65,000 on 28 October 2019 and FBT of $57,000 on 30 April 2020. ABC received a fully franked dividend of $21,000 on 1 November 2019 and an unfranked dividend of $33,000 on 12 December 2019. ABC paid a 75% franked dividend of $120,000 on 1 February 2020and a 50% franked dividend of $70,000 on 1 June 2020. Prepare a franking account for ABC for the year ended 30 June 2020.

Answer 1

Computation of Franking Account as on 30/06/2020:

Date	Transaction	Debit	Credit	Balance
01/07/2019	Opening Balance	-	-	35,000$
21/07/2019	PAYG instalment payment	-	35,000$	70,000$
21/10/2019	PAYG instalment payment	-	35,000$	1,05,000$
28/10/2019	GST payment	NA	NA	1,05,000$
01/11/2019	Fully Franked dividend received	-	9,000$	1,14,000$
12/12/2019	Unfranked Dividend received	-	-	1,14,000$

21/01/2020	PAYG instalment payment	-	35,000$	1,49,000$
01/02/2020	75% Franked Dividend Paid	38,571$	-	1,10,429$
01/04/2020	Income Tax Refund	22,500$	-	87,929$
21/04/2020	PAYG instalment payment	-	26,000$	1,13,929$
30/04/2020	FBT payment	NA	NA	1,13,929$
01/06/2020	50% Franked Dividend Paid	15,000$	-	98,929$
-

Working notes:

For Partially(75%) franked dividend paid: 1,20,000 * 0.3/0.7 * 0.75 = 38,571

For partially (50%) franked dividend paid : 70,000 * 0.3/0.7 * 0.5 = 15,000$

For fully franked dividend received :(21,000/0.7) - 21,000 = 9,000$

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