Imputation Credit Account - Memorandum Account

Andy_Naki

I need to set up an ICA to track tax paid (credit) and distributed to share holders as imputation credits on dividends (debits) and it should be a memorandum account. Any suggestions where it should be setup in the chart of accounts?

Alexia

Hi, @Andy_Naki.

We can't give advice when it comes to tax accounting, we can only help with management accounting. My recommendation here would be to meet with an accountant and discuss this situation, they'll be able to help much more than we can.

If you're just aiming to keep track of dividends paid as well as taxes, you would need an Equity account for Dividends Payment and both an expense and a Liability for your corporate taxes. A dividend payment would be a journal entry that looks like this:

• Credits the bank account from which the payment is made.
• Debits the Dividends Payment for the same amount.

Businesses are usually required to make corporate tax deposits which would be a debit to your corporate tax liability account and a credit your bank account. When the corporate tax expense is determined, you'll debit your corporate tax expense account and credit the corporate tax liability account.