Page 59 - F1 Integrated Workbook STUDENT 2018
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Corporate Income Tax and Capital Tax Computations
3.2 Appropriations of profit
Appropriations of profit such as dividends cannot be deducted in arriving at an
entity's taxable profits and are therefore taxable in the hands of the entity, i.e. tax
relief is not given for the dividend.
The dividend is then distributed to the shareholders who may be taxed on the income
as part of their personal tax.
As a result, the dividend is often taxed twice. There are four main systems to deal
with this situation:
Classical system
Imputation system
Partial imputation system
Split rate system
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