Under the “old two-tier” system, individual shareholders receiving section 44 dividends can claim a refund in part or all of the corporate tax paid.
Under the “old” system, company pays $80 dividend nett of corporate tax rate of 20%. The gross dividend would be $100. $20 has been paid by the company to IRAS. The $20 is placed in the Section 44 account.
Let us assume the individual shareholder’s personal income tax rate is 10%. $10 (ie. $100 x 10%) would be taken out of IRAS’s Section 44 account as credit against the tax payable by that individual.
What is the difference?
Under the one-tier system, the $80 received by the individual would be treated as exempt income. No adjustment of $10 would be given. Effectively, the individual pays a tax rate of 20% for that income.
What to do?
Companies, with accumulated profits which qualify for Section 44 credits and have the liquidity to pay dividends, may consider paying dividends before end of 2007.
So think about it.
Hi Photographer :),Is that Asia Insurance Building?
Hi Photo Looker :),Yes, you are right.Looks like my cameraphone got problem? Sigh…
Hi Photographer :),Since u love taking photos so much, why not consider getting a good camera? Anyway, its amazing that you can take such good shots from just a cameraphone.Waiting to see more mesmerizing pics from u 🙂
Hi Photo Looker :),Thanks for your complimentary words.Camera? Boh lui. Waiting for Christmas, at least.