The following table illustrates the computation of the imputed dividend credit for an individual in 1993. The table illustrates the taxation of a shareholder with a deduction from investment income (such as interest expense) and the taxation of a shareholder with no deductions.

                                                     FIM       FIM


Taxable income                                                 100
Corporate income tax at 25%                                  (  25)
Net income after tax                                            75

Computation Of Shareholders' Taxable Dividend Income

Cash dividends received                                         75
Imputed tax credit of 1/3 of cash dividend                      25
Taxable dividend income                                        100

Taxation Of Two Different Shareholders With 25% Tax Rate

Taxable dividend income                              100       100
Deductions (interest expense, etc.)                 (100)        -
Taxable investment income                              0       100
Tax on taxable income                                  0        25
Less imputed tax credit                             ( 25)     ( 25)
Tax refund                                            25 
Additional tax liability                                         0

The content of this article is intended to provide a general information on the subject matter. It is therefore not a substitute for specialist advice.