A company that pays dividends in excess of its taxable profits may be assessed to tax on the dividend under:
AThe excess dividend tax ruleCORRECT
BThe minimum tax rule
CThe thin capitalisation rule
DThe transfer pricing rules
ICANTaxationCompanies Income Tax: Computation and Losses2022
AI
Toaster Teacher
Why the answer is A, and why the others tempt you.
Where dividend paid exceeds total profits, CITA deems the dividend to be the total profits and taxes it at 30%. The Finance Act excluded retained earnings already taxed, franked investment income and exempt profits from this charge.
Want this in Pidgin, Yoruba, Igbo or Hausa? Sign up free →
Practice more Taxation questions
ICAN Taxation has thousands more questions like this — with Worked answers on every one.