CIMA F1 Syllabus C. Fundamentals Of Business Taxation - Tax systems - Notes ^{7 / 7}

Corporation tax is charged on all profits - whether given as dividends or not

The dividends are then subject to personal income tax

Hence double taxation!

The dividend received is subject to personal income tax BUT

the corporation tax already paid is imputed and deducted from your personal tax on the dividend

Here only part of the corporation tax imputed is used as a credit against the personal tax

Here the tax on the dividends are less than on the retained profits