Page 69 - F1 Integrated Workbook STUDENT 2018

Internattional Taxxation

Exxampple 2

Using the infoormation froom the preevious example:

A taax treaty eexists betwween the two counttries usingg the tax ccredit
method, calcculate the tax payabble in the UUK (Homeely’s count try of
ressidence) asssuming aa tax rate of 40%.

Sollution
$
Nett dividend rreceived 68,0000
Addd back WHHT 12,0000
––––––––
80,0000
Addd back UT 20,0000
––––––––
Grooss dividennd 100,0000
Tottal foreign ttax ($100,0000 – $68,,000) 32,0000
Taxx in UK
Taxx at 40% 40,0000
Lesss DTR (lowwer of foreeign and UK (32,0000)
tax)) ––––––––
Taxx paid in UK 8,0000

59