Castor & Pollux Limited is an Australian firm whose shares trade on the ASX. The firm earn part of itsdomestically income in Australia and and part of its income overseas, where it is required to pay tax to theforeign governments where it operates. Currently, the Australian corporate tax rate is 25% and theMedicare levy is 2%. Castor & Pollux provides dividend imputation to Australian-resident shareholdersfrom its Australian tax paid.Assume that Castor & Pollux pays a 85 % partly-franked dividend of $14.32 thousand to an Australianshareholder who currently has a taxable income of $250 thousand before dividends and a marginal taxrate of 32.5% and is NOT exempted from paying Medicare levy. Compute the franking credits this investorwould receive from the partly-franked dividend received.O a. $4057.33O b. $2148.00c. $3109.83d.$84197.24e.$83779.87O f. $2282.85g. $1915.30

The franking credit refers to the tax credit provided to the investors or the shareholders on the…

Answered: Castor & Pollux Limited is an…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter25: Taxation Of International Transact Ions

Section: Chapter Questions

Problem 31P

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Which of the following is (are) true about the dividend tax imputation system in New Zealand? Choose all correct answer(s). The dividend tax imputation system is very similar to that used in the U.Ss. O Dividends are essentially still taxed at the company's tax rate (28%). If we account for personal taxes, the tax advantage of debt relative to equity for New Zealand companies increases; this is why New Zealand companies prefer debt to equity as a source for long-term financing. If the dividend is fully imputed, the effective tax rate on dividend for individual shareholders in New Zealand are their personal marginal tax rates. If the shareholder received $1,000 imputation credit, but he needs to pay $5,000 tax on income other than dividend income, he/she only needs to pay $4,000 to the IRD.
Drake, Inc., a domestic corporation, has worldwide taxable income of $250,000, consisting of $200,000 U.S.-source income and $50,000 foreign-source dividend income from Jetco, a foreign corporation in which Drake owns 4% of the voting stock. The foreign tax paid on the dividend income is $20,000. a. What is the limit on the foreign tax credit? b. What is the US and total tax paid by Drake?
A U.S.-based MNC has three subsidiaries: S1 (40 percent owned by the MNC); S2 (33 percent owned by S1), and S3 (20 percent owned by S2). The taxable income for each firm is $100 million. The local taxes for each firm are $15 million, $20 million, and $10 million, respectively. The MNC's tax rate is 40 percent. 19. Can the MNC apply all of its local taxes as a credit against its U.S. taxes? If not, which subsidiaries can it use to get a credit against its U.S. taxes. Explain your rationale briefly. 20. Based on the "grossing up" concept, calculate all tax credits applicable to the MNC.
A U.S.-based MNC has three subsidiaries: S1 (40 percent owned by the MNC); S2 (33 percent owned by S1), and S3 (20 percent owned by S2). The taxable income for each firm is $100 million. The local taxes for each firm are $15 million, $20 million, and $10 million, respectively. The MNC's tax rate is 40 percent. A.) Can the MNC apply all of its local taxes as a credit against its U.S. taxes? If not, which subsidiaries can it use to get a credit against its U.S. taxes. Explain your rationale briefly. B.) Based on the "grossing up" concept, calculate all tax credits applicable to the MNC.
San Carlos Corporation, a U.S. multinational, had pretax U.S. source income and foreign source income as follows: U.S. source income $ 400,000 300,000 Foreign source income-Country W Total $ 700,000 San Carlos paid $60,000 income tax to Country W. Assume San Carlos' foreign source income does not qualify as foreign-derived intangible income. Calculate San Carlos' tax savings if it takes a foreign tax credit rather than deducting this tax.
Oracle Corp, a U.S. corporation, earns $25 million of taxable income from U.S. sources and $10 million of taxable income from foreign sources. What amount of taxable income does Oracle report on its U.S. tax return? a. $25 million. b. $35 million. c. $25 million less any tax paid on the foreign income. d. $35 million less any tax paid on U.S. income.
Spartan Corporation, a U.S. corporation, reported $6.2 million of pretax income from its business operations in Spartania, which were conducted through a foreign branch. Spartania taxes branch income at 15 percent, and the United States taxes corporate income at 21 percent. Required: a. If the United States provided no mechanism for mitigating double taxation, what would be the total tax (U.S. and foreign) on the $6.2 million of branch profits? b. Assume the United States allows U.S. corporations to exclude foreign source income from U.S. taxation. What would be the total tax on the $6.2 million of branch profits? c. Assume the United States allows U.S. corporations to claim a deduction for foreign income taxes. What would be the total tax on the $6.2 million of branch profits? d-1. Assume the United States allows U.S. corporations to claim a credit for foreign income taxes paid on foreign source income. What would be the total tax on the $6.2 million of branch profits? d-2. Assume the…
ENKANTADYA Corporation furnished you its financial data for 2018 as follows: Gross income, Philippines - P 800,500Expenses, Philippines - 450,000Gross income Singapore - 700,000Expenses, Singapore - 400,000Personal expenses - 150,000Interest from time deposits, BPI, Philippines - 20,000 Interest on money market placement, net of tax - 22,000How much is the amount of final withholding tax on passive income ?
Transcom, an Ohio corporation, earned $700,000 U.S. source income from sales of goods to U.S. customers and $330,000 foreign source income from sales of goods to customers in Canada. Canada's corporate income tax rate is 15 percent, and the United States and Canada have a bilateral tax treaty. Required: a. Compute Transcom's U.S. tax if it does not maintain a permanent establishment in Canada. Assume the foreign source income does not qualify as FDII. b. Compute Transcom's U.S. tax if it does maintain a permanent establishment in Canada. Complete this question by entering your answers in the tabs below. Required A Required B Compute Transcom's U.S. tax if it does not maintain a permanent establishment in Canada. Assume the foreign source income does not qualify as FDII. U.S. income tax Required A Required B >

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