SMSF Accounts question - franking credits

Discussion in 'Superannuation, SMSF & Personal Insurance' started by qak, 19th Sep, 2018.

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  1. qak

    qak Well-Known Member

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    I'm looking at a set of accounts for an SMSF, where the accountant has changed software from one year to the next.

    This year, income includes franking credits, but last year franking credits were a negative tax expense (a tax benefit?)

    eg FF dividend $70 received has $30 franking credit attached
    2018: Dividend income $100 - tax $15 = net profit $85
    2017: Dividend income $70 + tax benefit $15 = net profit $85

    Any views/arguments on which is more correct?
     
    qak, 19th Sep, 2018
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  2. Trainee

    Trainee Well-Known Member

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    The result is the same?
     
    Trainee, 19th Sep, 2018
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  3. qak

    qak Well-Known Member

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    Yes but the income is different!
    FWIW I always thought the 2017 way was correct, but can't find much to support that.
     
    qak, 19th Sep, 2018
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  4. Trainee

    Trainee Well-Known Member

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    So what if the income is different?
     
    Trainee, 19th Sep, 2018
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  5. qak

    qak Well-Known Member

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    qak, 19th Sep, 2018
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  6. Trainee

    Trainee Well-Known Member

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    What do you win?
     
    Trainee, 19th Sep, 2018
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  7. qak

    qak Well-Known Member

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    "I told you so?"

    I was trying to find out what other people (plural) thought ...
     
    qak, 19th Sep, 2018
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  8. Trainee

    Trainee Well-Known Member

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    Since super funds dont / cant distribute franking credits, its a potayto potahto thing.
     
    Trainee, 19th Sep, 2018
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  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Franking credits should do two things. Firstly the income is grossed up. And then taxed (15% usually but can be 0%). Then the value of the franking credit (rounded to $0, no cents) is debited to reduce overall tax payable. ie The fund is given a credit for the value of the franking credit, perhaps foreign tax offset and no TFN withholding + PAYG instalments paid.

    The tax return includes a calculation statement that should be reviewed.
     
    Paul@PAS, 20th Sep, 2018
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  10. Mike A

    Mike A Well-Known Member

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    Think the OP was referring to whether it should be recorded grossed up or net in the financials. Standards say at net.
     
    Mike A, 20th Sep, 2018
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