Question

A company wants to pay a dividend of $10,000 to one of its shareholders. It has $2,500 imputation credits available in its ICA to attach to the dividend. How much RWT must the company deduct from the dividend?

In NZ

Answer 1

Answer

Facts:

Particular	Amount
Dividend	$10,000
Imputation credit	$2,500

Current RWT rate is 33%

The RWT can be calculated using following formula

" (A× (B+C)) -C"

where in A = Refered as RWT rate i.e 33%;

B = Dividend

C = Imputation Credit available

CALCULATION OF RWT:

= ( 33 % × ( $ 10,000 + $ 2,500 )) - $ 2,500

= $ 4,125 - $ 2,500

= $1,625

RWT

$1,625

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