Exempt Income

Question 1

What are the 2 categories of tax exemptions?

Answer 1

Exempt entities
Exempt income

(both apply whether in part or in whole)

Question 2

What dividends will a company be taxed on?

Answer 2

Dividends from shares it does not actually own

Question 3

What is a hybrid equity instrument?

Answer 3

Where the issuer of a share has an obligation to redeem the share within 3 years or the shareholder has a right to have the shares redeemed within 3 years

Question 4

What tax rate are local dividends subject to?

Answer 4

20%

Question 5

What is the calculation for foreign dividend tax exemption?

Answer 5

A = B x C
A = amount to be exempted
B = 55.55% for natural persons and special trusts
= 28.57% for companies and other trusts
C = the total of non-exempt foreign dividends

Question 6

What is the tax rate for non-exempt royalties?

Answer 6

15%

Question 7

What is the Eleventh Schedule?

Answer 7

An alphabetical list of exempt grants

Question 8

What is the Eleventh Schedule?

Answer 8

An alphabetical list of exempt grants

Question 9

What are the two factors of an annuity paid under contract?

Answer 9

1. An exempt capital portion
2. A taxable income portion