The amount of money that can be distributed to shareholders as a return of capital, without...
The amount of money that can be distributed to
shareholders as a return of capital, without being a return on
capital, is the capital financial concept
T/F
Homework Answers
- As the return of capital is different form return on capital, return of capital is a financial concept,
- Return of capital refers to repayment of capital to the shareholders where as return on capital is something which is a return on the shares hold, it may be dividend etc; so difference between the two should be understood clearly.
- Return of capital reduces the capital balance so it is a financial concept, whereas return on capital don't result in any decrease in capital.
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The amount of money that can be distributed to
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Marks)
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Q1. A resident capital company has both Saudi and non-Saudi
shareholders and its capital is divided between them equally. Net
income for 2019 was 3,000,000 SR and was adjusted according to the
tax rules applicable in the kingdom is 3,200,000 SR. (2
Marks)
Required:
1. Compute the tax amount to be paid by the company.
2. Compute the tax amount to be paid by non-Saudi shareholders
assuming that dividends paid in cash of 1,000,000 SR.
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