The issued share capital of a company is comprised of:

(a) Ordinary shares (fully paid up) $8,000,000

(b) 12 % Preference shares $5,000,000.

There are 8,000,000 ordinary shares and 5,000,000 preference shares. The Commissioner has indicated that the stated rate of the preference share dividend as not reasonable. A reasonable rate has been agreed at as being 4% and this is the rate that is to be used. Any excess over this amount if any is to be disallowed. The accountant would have used the 12% rate noted above.

Using the information in the note above, calculate the preference share dividend adjustment (if required) for taxation purposes. Please show all workings and state any assumptions made on the lines provided below.