Suppose Tetra Finishing Company (TFC) makes a profit of $3 per share and decides to distribute it all to shareholders as a 50% partially franked dividend of $2.471 per share. Corporate tax rate is 30%.

If you hold 1000 shares in TFC and your income tax rate is 30% what is the total amount of tax you will pay to the government or will be paid back to you? Choose the closest answer.

Multiple Choice

• You will pay $2471 to the government in taxes

• The government will pay $370 to you

• The government will pay $900 to you

• You will pay $900 to the government in taxes

• You will pay $370 to the government in taxes