QUOTE(cherroy @ Jul 7 2009, 11:37 PM)
For 3) need more clarification
Company was taxed, but shareholder can claim back the tax if the shareholder total income is not subjected to tax or claim back the differentiate if the shareholder tax bracket is much lower than the corporate tax rate.
I see. Will add this and read more about this.
QUOTE(htt @ Jul 8 2009, 09:45 AM)
I think all wrong
1. TE just to confuse you, actually taxed to company.
2. company tax not necessary 25%, think that's lower, couple with other tax deductible, can be even lower (or higher for some company).
3. TTS? Company got the tax credit to declare dividend & distribute profit to shareholders, shareholders can claim back excess tax paid based on individual tax rate/ bracket.
But I don't think we need in depth knowledge for this topic, as tax is hard for most & the more you provide will only end up confuse more
Just know to claim back whatever should be claim back and pay whatever should be pay will do for most of us.
Also no use study tax in depth unless you are really interested or got great benefit by study that, because tax law change almost every year, what you study now might not be applicable in a year or two, waste brain cells
Thx for your input. Will make the necessary corrections.
Yeah, I'm not planning to go into the details. Just want to provide a little background and some information so that forumers can understand what it means when they see the dividends declared.
QUOTE(lklatmy @ Jul 8 2009, 10:51 AM)
1 and 2 same answer,the single tier dividend are of the same category and it's not taxable in the hand of the receipient. No need to include in the income tax return.KLK should be more specific and state the dividend as " Interim dividend 10 sen Single Tier T.E."
3 is taxable in the hand of the receipient,must declare the gross amount and offset the Section 108 credit(ie the tax credit) against the tax payable.If you hold 1000 shares in Allianz,you will receive dividend of RM15 with tax credit of RM5.
I stand to be corrected.
I see. Thx for the info. I read your blog again and it was very helpful. Need to clarify a few things. Quote from your blog:
QUOTE
When a Company makes profit of RM10 million in a financial year,tax at 27% would cost the company RM2.7m which has to be paid over to Inland Revenue in cash.This 2.7 m paid is known as Section 108 credits.
If this company decides to distribute a gross dividend of 10% less tax to the shareholders, shareholder who holds 1000 shares of RM1 each would receive RM100 less tax 27%,the net amount received is RM73.
This shareholder then declares the gross dividend of RM100 in his Income Tax return as his dividend income.The RM27(known as S108 credit) is then deducted from the tax payable by the shareholder .This whole system where tax paid by the company is imputed to their shareholders is known as the "imputation system".
In your example, the dividend is : 10% less tax
So, 1000 shares of par value RM1 each, we will receive RM73.
My question is:
1) Is the "less tax" now 25%, 26% or 27%?
2) We only receive RM73, but why declared RM100? Is it because the RM27 was taxed?
3) If our income tax bracket was 13%, then we can claim back RM14 right? How do we claim this back? Is this the same as the "E10) Tolakan cukai seksyen 110 (dividen)" in the income tax form?
4) By looking at the dividend certificate (subsidiary income tax certificate), how do we know whether that dividend is taxable or not?
Basically, what I'm driving at is to understand the whole process and to explain it as simple as possible - from the point of a shareholder receiving dividend to how he file the income tax returns to how to claim back if the tax bracket is lower.
Maybe you can give a better example/explanation?
Something like your example:
Company declare dividend of 10% less tax
You hold 1000 shares of RM1 each : Receive RM100
But 27% tax so actually receive only RM73
Declare RM100 as dividend during income tax filing
Tax bracket 13% so can claim back 14% (RM14)
Claim is through.....
This post has been edited by kmarc: Jul 8 2009, 11:10 PM 
Jul 7 2009, 03:01 PM
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(A very big thank you to those who did help out! 
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