Question

Discussion Topic:

In this discussion, we will examine the taxation of dividends. Should dividends paid to corporations be taxed differently than dividends paid to individuals? Why or why not?

Answer 1

solution) unlike bonus and salaries, dividends are not tax deductable. so where it is individual or corporations they need to pay tax. dividend is the ater tax amount that is divided among shareholders of the company. Individuals pay income tax on the income recieved in the way of dividend and corporations pay corporated dividend tax. Yes corporations need to be taxed differently than dividends paid to individuals as corporations earn profit in bigger volumes and are taxed on flat rates whereas individuals are taxed as per the slab due to difference in income volumes. Another reason for the difference in taxation of dividends of individuals and corporations is the majority holdings of the share by corporations which fetch huge volume of compan's profits in terms of share holdings.