MELCA Dividend Calculation

[Kiwimm]

I am trying to work out the dividend calculation for the MELCA dividend received yesterday.

Dividend per share = 4.19c
Imputation Credit = 1.66c (25.93%)
Tax @33% = -1.87
Net Dividend = 3.79c

My question is where does the 25.93% come from for the imputation credit? States in the interim report that this is 90% of the corporation tax rate.

And why is not imputation not 100% of corporation tax?

[Harvey Specter]

I am trying to work out the dividend calculation for the MELCA dividend received yesterday.

Dividend per share = 4.19c
Imputation Credit = 1.66c (25.93%)
Tax @33% = -1.87
Net Dividend = 3.79c

My question is where does the 25.93% come from for the imputation credit? States in the interim report that this is 90% of the corporation tax rate.

And why is not imputation not 100% of corporation tax?

They can impute to any level. They are probably distributing more in cash that their taxable income (as cashflow is different to income) so dont have enough to fully impute.

[Snoopy]

I am trying to work out the dividend calculation for the MELCA dividend received yesterday.

Dividend per share = 4.19c
Imputation Credit = 1.66c (25.93%)
Tax @33% = -1.87
Net Dividend = 3.79c

My question is where does the 25.93% come from for the imputation credit? States in the interim report that this is 90% of the corporation tax rate.

Kiwimm, 90% of the dividend paid to you is:

0.9 x 4.19c = 3.77c

Under NZ income tax law, the current company headline tax rate is 28%. Fully imputed means fully tax paid. So the imputed part of the dividend paid before 28% of it went off to the tax man was:

3.77c/ (1-0.28) = 5.24c (A)

Or looking at it another way, the amount extracted in cents by inland revenue out of your dividend was:

5.24c - 3.77c = 1.47c

Now we turn our attention to the part of the dividend that was not imputed:

4.19c - 3.77c = 0.42c (B)

No tax has been paid by Meridian on this bit. So the total gross dividend payment (A+B)was:

5.24c + 0.42c = 5.66c

We have already worked out that the total tax paid was 1.47cps

1.47c / 5.66c = 26%

Within rounding, this is the same as the 25.93% imputation credit declared. That is where the number comes from.

And why is not imputation not 100% of corporation tax?

Imputation is 100% of corporation tax paid.

But if you also add into the mix income on which no tax has been paid, and view the tax fully paid income and tax not paid income as a whole then the amount of tax paid on the whole income basket is diluted to less than 28%. HTH

SNOOPY

[Snow Leopard]

I am trying to work out the dividend calculation for the MELCA dividend received yesterday.

Dividend per share = 4.19c
Imputation Credit = 1.66c (25.93%)
Tax @33% = -1.87
Net Dividend = 3.79c

My question is where does the 25.93% come from for the imputation credit? States in the interim report that this is 90% of the corporation tax rate.

And why is not imputation not 100% of corporation tax?

Snoopy's calculation is correct.

However your 1.66c Imputation Credit is wrong - the attached imputation credit amount is 1.467c per share.

Total dividend 4.19 + 1.467 = 5.657c
1.467 as a % of 5.657 = 25.93%

[100% imputation of 4.19c = 0.28 * ( 4.19 / 0.72) = 1.6294c
1.467 as a % of 1.6294 = 90.03%]

Best Wishes
Paper Tiger