In Chapter 7 of the notes page 5, there is an example that shows the following:
Policyholder BLAGAB I-E tax = tax rate * (BLAGAB I-E Profit - minimum profit)
20%*(200-110)
Directly underneath this there is a question (7.1). The solution for the I-E part of this question is as follows:
BLAGAB Policyholder Tax = tax rate * (BLAGAB I-E profit - shareholder unfranked income)
20%*(520-250)
and BLAGAB Shareholder tax = tax rate * shareholder unfranked income
24%*250
Is the solution to this question correct? To be consistent with the example should it not be as follows:
BLAGAB Policyholder Tax = tax rate * (BLAGAB I-E profit - minimum profit)
20%*(520-300)
BLAGAB Shareholder tax = tax rate * shareholder unfranked income
24%*250
If the original Acted solution is correct then the BLAGAB dividend income of 50 is only taxed at 20%. Why is this this assumed to be all policyholder income?
Thanks
Last edited by a moderator: Mar 9, 2013