Details
Shareholders receive their share of the profits from a company when the company pays a dividend.
Directors of a company must consider the following issues before declaring and paying a dividend:
- A dividend may be paid out of profits of one year without making up losses of previous years.
- Profits arising from a bona fide revaluation of unrealised fixed assets.
- Dividends cannot be declared if the result would be that the company is unable to pay its debts.
- Dividends cannot be declared out of anticipated profits.
Net Dividend Calculation
For the below example, we are doing a Gross Dividend of $50,000 with an assumed tax rate of 28% and a resident withholding tax rate of 33%
First, to calculate the Imputed Credits:
Gross dividend * tax rate
50,000 * 28%
= 14,000
Next, to calculate the Resident withholding tax
(resident withholding tax * (Gross dividend)) - Imputed credits
(33% * (50,000)) - 14,000 = Resident withholding tax
Total Residential withholding tax of 2,500
Finally, to Calculate the Net Dividend
Gross Dividend - Imputed Credits - Residential withholding credit
50000 - 14000 - 2500
$33,500 net dividend received by shareholders.
If the Tax rate is higher than the Resident withholding tax rate and as such, the calculation would result in a negative resident withholding tax amount, then no Resident withholding tax will be deducted.
https://www.ird.govt.nz/-/media/project/ir/home/documents/forms-and-guides/ir200---ir299/ir284/ir284-2020.pdf
How to prepare a dividend statement
| From the Main Toolbar, go to Company. |
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| Select the Company from the list. |
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| Select Shareholders |  |
Click
Select Add Dividend.
Instructions
CAS 360 will display the Dividends screen.
| Field | Explanation |
|---|---|
| Date Declared | Date the dividends declared by the company directors |
| Share Type | Choose a company share type which dividends will be paid for |
| Amount type | Select either Dividend Per Share or Total Dividend |
| Gross Dividend Amount | Enter the amount paid per share or the total amount paid to all shareholders (depending on the amount type selected) |
| Imputed Credits | This will be entered automatically by selecting the Dividend tax rate |
| Dividend Tax Rate | Select a rate from the drop-down list. Represents the Franking/Imputed Credit Rate. |
| Resident Withholding Tax | This will be entered automatically by selecting the Resident Withholding tax Rate. |
| Resident Withholding Tax Rate | Select a rate from the drop-down list. Represents the Resident Withholding Tax. |
| Net Dividend | Represents the Dividend amount after removing the Imputed credits and Resident Withholding Tax amounts from the Gross Dividend Amount. |
| Dividend Payment | How the dividend is paid to the Company Shareholders. Select either Dividend Paid in Cash, Dividend Credited to Load Account or Other |
| Payment Date | Date the dividend is paid |
| Payment Currency | Enter the Currency Symbol ( for example NZD $) |
Click 
Documents Prepared
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Document Type
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Options
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|---|---|
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Dividend Statement |
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Declaration of Dividend Resolution |
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Notice of Members Meeting |
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Members Minutes or Resolution |
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Member Consent |
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| Listing of Dividends Paid |
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