Hi stix (and of course Cusox),You are a lucky sod my friend. I...

Hi stix (and of course Cusox),

You are a lucky sod my friend. I have to pay for two lots of fees plus of course the one for the PPC. I am beginning to consider though that I will have to give one of them away, especially when I have downgraded already to a great extent and concentrating on something which I consider to be better in life.


Retiree,

Seen that you have raised something interesting in regard to the Taxation issues of dividends, I may, if I am allowed to do so, try and throw some more lights into the issue.
This is not to be taken as patronising, it is just for discussion purposes for the one that are willing to read it.

Sometime last year, the Australian Taxation Office (ATO) issued an amendment to section 254T of the Corporation Act 2001 which changed the requirements for the payment of dividends from a profit base test to a Balance Sheet test, and the guidance that the ATO had released in this regard, in relation to the availabilty of franking credits.

There were concerns at the time of that release, that, amongst other things, it stated that a dividend for tax purposes that was not paid out of profits could not be franked if it was sourced directly or indirectly from a company's share capital account.

There were also no clear indications at the time about addressing the circumstances where a company (With Accumulated Losses) pays a dividend out of current year trading profits.

On the 21st December 2011, the ATO released a Draft Taxation Ruling TR 2011/D8 Income Tax: Sect 254T of the Corporation Act.

The Draft Ruling states, amongst other things, that where a company pays a dividend (for taxation purposes) to its shareholders, in accordance with its constitution and without breaching sect. 254T or part 2J.1 of the Corporation Act, and that it is paid out of current trading profits recognised in its accounts and availabe for distribution, the dividend is frankable even though the Company had accumulated prior year accounting losses, and/or the value of the company's net assets is less than its share capital.

I hope that this will help.


PS.: Please take note that the above are not to be taken as Taxation and finacial advice. They have just been included for discussion purposes, and everyone should be doing their own research.

Cheers,
Buddy134