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Old 25th November 2020, 01:11 AM   #283
psionl0
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Originally Posted by blutoski View Post
No, private companies SOP is to issue dividends to owners, if the taxes work out better. Dividends are taxed differently than earned income, is the rationale.

Just as an example, here in Canada, my wife's company has 10,000 shares, and her parents have a minority stake. The sole reason for this was to issue them dividends to supplement their income. (The expression is "income sprinkling") - this was disallowed 2 years ago and we no longer do this.
A classic example of what happens when politicians look after their rich mates.

In Australia, dividends form part of your taxable income and can put you in a higher tax bracket. The difference is that dividends are tax imputed meaning that part of your taxable dividend has already been sent to the tax man and becomes a credit for tax already paid.
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