QuestionQuestion 1:ABC Co (a resident private company) owns 20% of the shares in XYX Co (a resident public company). Both companies have a corporate tax rate of 30% and a corporate tax rate for imputation purposes of 30%. XYX Co pays ABC Co a $70,000 dividend which has $12,000 of franking credits allocated to it (i.e. the franking percentage of the dividend is 40%). What are the relevant franking account entries for ABC Co and XYX Co? Assuming this is the only receipt of ABC Co, how much tax will it be required to pay? How would your answer be different if ABC Co was a non-resident company?Question 2:Referring to relevant statutory provisions and common law, discuss whether, for the current income year, the following amounts would be as an allowable deduction against assessable income.Provision for the estimated amount of trade debtors’ accounts, which might not be collected.An amount of $9,000 paid to a solicitor for preparing a partnership deed.Newspapers purchased by an accountant who advises clients on financial and investment matters.Travel cost of a business executive to attend a trade fair in London paid by the employer.Speeding fines of $ 500 paid by an owner to a driverLawSocial ScienceTax law BULAW 5916
