How to best handle Imputation Credit (Australia); Tax related

[Maf. King]

Hi Michael,

There is a similar concept in the UK, called "dividend tax credit".  I've 
never been in a position to even think about a reclaim.... but I do track it 
from year to year, as who knows what is around the corner.  It is far easier 
to record too much data in GC at the time and sum accounts in a report or 
spreadsheet than it would be to go back and split up transactions, IMHO.

I record a dividend transaction as follows: (viewed from my receiving bank 
account - hope the indenting works ok!)

Expenses:Taxes:DividendCredit	£2.60
Bank:checking				£24.00
Income:Dividends:Net						£24.00
Income:Dividends:TaxCredit					£2.60

I'd imagine that In:D:Net would happily split as Franked and Unfranked in your 
case

If I were to make a reclaim, I'd have a negative expense transaction from 
E:T:DC to Bank:Checking, which would have the desired effect of reducing the 
total tax paid and increasing the money available to spend on beer...

Note, I'm not an accountant, these are personal books, and if the tax credit 
isn't really my expense in law (although I think it is), I don't really care - 
it works for me. Of course, YMMV.

HTH,
Maf.



On Fri 12 July 13 19:53:37 Michael Gordon wrote:
> Thank you, Peter. Have to give the handling - or ignoring - of Imputation
> credit some more thought.
> 
> Tax - not interested in doing anything complicated with this. My interest
> was mostly if it eased the handling of Imputation credit.
> 
> Do you bother to separately record Franked and Unfranked dividends? I'm
> beginning to wonder if that's worth the bother, too.
> 
> For years I used a program I wrote in C++ but now my compiler isn't
> compatible with the newer operating systems so any updates to the program
> are an issue plus the fact that my C++ is very rusty indeed. The program
> had the great advantage that I could arrange things how I liked, though, as
> an engineer, these arrangements didn't follow proper accounting procedures!
> With GnuCash I have to do things 'right' and I think also I should revise
> my thoughts on was is really worth the trouble of entering and tracking.
> 
> Mike.
> 
> On 12 July 2013 17:56, prl <prl at ozemail.com.au> wrote:
> > Hi, Michael.
> > 
> > I don't record Imputation Credits* in Gnucash. But then I don't put any of
> > my tax through GnuCash, and I don't normally get a payment back from my
> > tax. I just pay any excess owing to the ATO into an Expenses:Tax account.
> > But I only ever have a few hundred dollars in imputation credits anyway.
> > If
> > you have a large amount relative to your income, then it may be worth the
> > effort tracking it.
> > 
> > The tax arrangements for superannuation pensions are too complicated for
> > me to try to deal with them through GnuCash in any way that comes close to
> > reflecting reality. I only get an annual statement of the tax on my
> > pension
> > anyway (at the end of the FY). I just budget for what I guess I'll have to
> > pay the ATO at the end of the year.
> > 
> > You could make an Asset:Imputation Credit account, pay into it when you
> > get your dividend statements, and regard some (or all) of your tax return
> > cheque as having come from that from that account, and do a split payment
> > into the account that you pay the cheque into.
> > 
> > On the Tax Related checkbox, I've never seen anything remotely related to
> > Australian income tax in Gnucash. But that may be because I've simply
> > assumed there won't be anything and haven't looked hard enough :)
> > 
> > * For non-Australian readers, Imputation Credits are effectively an
> > allowance for the tax the company has already paid in company tax on
> > profits that are being redistributed as dividends. If your marginal income
> > tax rate is below the company tax rate, Imputation Credits are effectively
> > negative taxation on the dividends.
> > 
> > Cheers,
> > Peter
> > 
> > On 12/07/13 11:05, Michael Gordon wrote:
> >> I'm running GnuCash 2.4.13 on Windows 8.
> >> 
> >> 1. Imputation Credit
> >> Just starting to enter data and am stuck on how best to handle Imputation
> >> credit when recording dividend income.
> >> In Australia, those with low income tax rates can claim back tax that has
> >> been paid by companies when they declare dividends.
> >> A dividend statement has three elements:
> >> Franked amount (the amount on which the company has paid tax)
> >> Unfranked amount (the amount on which the company has NOT paid tax)
> >> Imputation or Franking credit (the maximum amount that you may be able to
> >> claim back from the government when filing your tax return)
> >> 
> >> So, the cash paid at dividend time is the total of Franked and Unfranked.
> >> I know that I can record this as a split transaction.
> >> 
> >> But what to do about the Imputation Credit? As a retiree I get most if
> >> not
> >> all of this so it is a kind of delayed income, but I'd like to keep track
> >> of it as dividends are paid.
> >> 
> >> 2. Tax related. This check box appears to be unavailable. Only viable for
> >> US users, perhaps?
> >> 
> >> Mike.
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-- 
Maf. King
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