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- 3 Marks
Question
The following is a statement of retained earnings:
Required:
What is the tax implication, if any, on the above income statement?
Answer
Under section 94 of the Internal Revenue Act, 2000 (Act 592), a bonus issue to shareholders constitutes a capitalization of profits.
(1 mark)
The amount of GHS 16,000.00 is considered a dividend payment and should suffer a final withholding tax at the rate of 8%, under section 83 of the Internal Revenue Act 2000, Act 592, and Part IV of the First Schedule.
(2 marks)
- Tags: Bonus issue, Dividend tax, Retained Earnings, Withholding Tax
- Level: Level 3
- Topic: Business income - Corporate income tax
- Series: NOV 2015
- Uploader: Joseph