Question

Should finance managers focus on after-corporate tax or after-personal-tax returns? Explain in details

Answer 1

A finance manager should focus on after-corporate tax income and not on personal tax returns. A personal tax returns is for the employee. Being a finance manager of the company the person should look into the amount after meeting every obligaions. It means one should look into the net profit after tax after meeting every obligations of the company whether it is interest payments, tax liability etc. On other hands dividends are not compulsory and hence it is not an obligation. But when a company declares a dividend it is deducted from its net income only. The retained amount goes to Reserves and Surplus for company growth plans whether organic or inorganic growth plans. Dividend received to shareholders are taxable at shareholders' side. It is their personal income on which personal income taxes have to be paid. It is not the finance manager duty to look into that area.