RSM324H1 Chapter 7: CHAPTER 7-3
15 Feb 2017
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Chapter 7 income from property: dividend income. Definition: the returns provided on the investment in shares of a corporation; the(cid:455) (cid:396)efle(cid:272)t the dist(cid:396)i(cid:271)utio(cid:374) of a po(cid:396)tio(cid:374) of the (cid:272)o(cid:396)po(cid:396)atio(cid:374)"s p(cid:396)ofits to the shareholders. Dividend income can be received by both individuals and corporations. Exhibit 7-1: simple structure of corporate ownership. Corporate earnings are taxed in the hands of the shareholder, either as dividends (property income) or as capital gains, depending on whether or not the corporate profits are distributed. A: profits of x (owned directly by an individual shareholder) are subject to tax, and those after-tax profits are subject to a 2nd level of tax when received as a dividend by the individual shareholder. B: x (shareholder is y), the shareholder of y is the individual. The after- tax profits earned by x are distributed and received as dividend income (property income) by y.
