QuoteReplyTopic: Dividends - declaration and payment Posted: 26/June/2012 at 13:31
Hi. It's coming to the end of tax time and this is the first Company i have that is likely to pay dividends. Can someone assist to the timing to declare the dividends for each type of dividend;
Assumption: Company and constitution is compliant to distribution of dividends under the new rules (must be able to pay dividends i.e. no debt, no creditors, etc)
1. Unfranked dividends
a. I presume that if the Company declares unfranked dividends, this must be declared and distributed before the end of the current FY (i.e. before 30 June 2012)?
b. Can an unfranked dividend be declared by 30 June (2011/12), but not paid until after 01 July (2012/13), so the shareholder would not have to declare the unfranked amount in his/her tax return until next financial year (2012/13)?
c. I presume an unfranked dividend is treated similar to Company expenses (no tax will be due/paid on the amount declared)?
2. Fully Franked Dividends
a. Say in the current FY (2011/12) - can fully franked dividends be declared and paid by 30 June 2012 - taking into account the 30% tax that will be paid for that FY. In this case the shareholder will declare in the 2011/12 tax return the FF dividend and tax paid.
b. OR must the Company first submit the annual return (2011/12), pay 30% tax of profits then declare a dividend (say between July and Sept 2012 once all Company returns are lodged). Then the shareholder declares in their 2012/13 tax return the FF dividend/tax paid?
c. Can a dividend be declared at anytime? Say a Company makes reasonable/substantial profits by mid-year (December), can a dividend be declared say in January? Does the Company need to lodge and pay tax from the last quarter for that dividend to occur (complete BAS + mid year accounts + pay 30% Company tax on profits at that time i.e. December/January)?
I have a preference for the Company to issue part of current 2011/12 profits as an unfranked dividend, and this dividend be reflected in the Companies 2011/12 books, but the dividend is not payed to shareholder(s) until after 01 July 2012, so the unfranked payment won't be reflected into the individuals current tax year (2011/12), but will be reflected in the individuals tax return next FY (2012/13). Can this be achieved?
Note: I am unable to ask the Company accountant yet, as this Company is relatively new and we will choose an accountant in the next month.
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