Friday, February 19, 2010

What is single tier dividen ?

现在普通你看到那些股息有些有注明 deducted 25% tax,是multiple tier。


所以你报税的时候,你的EA form内的income + 股息 income (RM100)(股息报在hk3)
若算出你要给的税是少过你被扣去的PCB 和 股息,那么LHDN要退钱给你

现在的情况是single tier是直接扣了公司税,然后派股息的时候是从retained earning那边派给你,股息来就原原本本给你,不会看到政府抽,你不可以再去claim回什么税了。

single tier 唯一受惠的是超有钱的那些。他们的tax 可能已经中到 27%了的,那么这个收入无需再被抽了。

以前multiple tier受惠的也是有钱人。

when a company declares dividend, it will be paid out of retained earnings or any distributable reserves. under your example, BJToto pays 10sen per share as above which result in RM1000 dividend, RM740 is deducted from retained earnings of the company and RM260 is deducted from tax credit accounts.

Let's say BJtoto just started business and in the first year, make a profit of 1000 and pay tax of 26% tax, 740 is credited into retained earnings. under the same situation....

multiple-tier aka imputation system... company can still declare 10cents per share. company only needs to deduct 740 from retained earnings and 260 from tax credit account. share holder can claim back the 260 from govt is his/her tax bracket below 26%

single-tier system... the company can no longer declare 10cents per share becos it does not have enough retained earnings to distribute dividend. this is a regulation under company act, section 368 or 386. so the company can only pay 7.4cents per share resulting in shareholder getting only 740. period.

dividend paying mechanism can be a complicated thing... not just by a simple statement by the company on how much per share.

Prior to 1 January 2008, Malaysia adopted the imputation system which required the imposition of tax on the profit at corporate level and again at shareholders level. The principle behind the imputation system is to overcome the double taxation of income. Under the imputation system, companies resident in Malaysia are required to deduct tax at source at the prevailing corporate tax rate on dividends paid to their shareholders. The same income would be taxed twice if the credit is not imputed to the shareholders.

The single-tier tax system was introduced in Budget 2008 to replace the imputation system with effect from year of assessment 2008. Under this system, corporate income is taxed at corporate level and this is a final tax. Companies may declare single tier exempt dividend that would be exempt from tax in the hands of their shareholders. There are a few reasons for the move to the single tier system. First, the imputation system was not able to accommodate increasingly sophisticated business transactions. Second, the obligation of resident companies to maintain the franking account which entailed high compliance costs. Third, to remove the constraint that a company might have distributable profit and yet could not frank dividend because of insufficient credits.


imputation system受惠的是low income的人,因为他们可以做tax return claim tax credits;

single tier system受惠的就是有钱人,因为extra dividends不必在中tax。

本来可以claim tax credits的low income的人在single tier system下的那25% tax就拿不回來了。


No comments:

Post a Comment