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Question Assuming an imputation tax system, show the values for A, B, C and D below. Show all workings and attach a minus sign (-)
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Assuming an imputation tax system, show the values for A, B, C and D below. Show all workings and attach a minus sign (-) to the value if it is a cash outflow. (4 marks)
Marginal tax rate | 45% | 19% |
Corporate level | ||
Net Profit Before Tax | $3 | $3 |
Corporate tax (30%) | -$0.90 | -$0.90 |
Net Profit After Tax | $2.10 | $2.10 |
Shareholder level | ||
Cash dividends | $2.10 | $2.10 |
Gross-up adjustment | ||
Grossed-up dividends | A | A |
Personal Tax | ||
Franking credit | ||
Tax payable or refund | B | C |
Dividend after taxes | D |
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