Franking Credits

[Graeme Nichols]

Maf. King wrote:
> On Wednesday 08 July 2009 04:21:40 Graeme Nichols wrote:
>> Colin Law wrote:
>>> 2009/7/7 Graeme Nichols <gnichols at tpg.com.au>:
>>>> Hi,
> <SNIP>
>> So, this 'Franking Credit' is tax that has been paid to the Australian
>> Tax Office on one's behalf by the Company.
>>
>> This needs to be kept track of because when filling in one's tax return
>> dividends have to broken into 'Franked' & 'Unfranked'. The 'Franking
>> Credit' has to be entered into the Tax form as well so it will be used
>> to offset one's tax liability.
>>
>> The question is: In double entry accounting there are two accounts
>> involved. I can easily set up a 'Franking Credit' asset account but I am
>> not sure of how to set up the other, or 'from' account.
>>
>> I guess I could use Equity - Opening Balances or Equity - Franking
>> Credits'.
>>
>> I was wondering how other GnuCash users handle it.
> 
> 
> Hi Graeme,
> 
> Ahh, I understand the question now.  The UK handles dividends and tax in a 
> similar way, but I haven't heard the term Franked credit before.
> 
> Over here, dividend payments are made with a 10% "tax credit" which sounds 
> similar as it can reduce personal tax in some circumstances, but one never 
> actually holds the cash.  However, the tax return asks for the total dividend 
> received including the credit, so I agree, that tracking it is a good idea.
> 
> I have an account structure like this:
> Assets:Chequing
> Income:Dividends:nett
> Income:Dividends:tax credit
> Expenses:Taxes:Dividend Credit
> 
> Dividends payments then are a 4 way split transaction in GC - the actual 
> payment goes between my chequing account and income:Div:nett, and the tax 
> credit component goes between I:D:tax credit and E:T:Dividend credit 
> accounts.
> 
> Worked for me during for my most recent tax return!
> 
> HTH,
> Maf.

Hi Maf,

Thank you. That is what I was wanting to know.

My Account setup is similar to what you have.

Current Account:
Income:Dividends:Franked
Income:Dividends:Unfranked
Income:Dividends:Franking credit:(Name of security)
Equity:Franking Credit

Your Expenses:Taxes:Dividend Credit is much better so I will follow your 
example.

Thanks again.

-- 
Kind regards,

Graeme Nichols.
...
Registered Linux User 381781 (http://counter.li.org/)
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-                 Two is company, three is an orgy.                  -
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