Which of the following best describes double taxation?
A)Both the provincial and federal levels of government collect tax on an income amount.
B)The taxable amount is collected at two different points in any given year.
C)Different levels of government use two different tax brackets.
D)Income that is taxed at the corporate level and then again at the personal level when the corporation pays a dividend.

Question

Quizplus · Accepted Answer

Double taxation occurs when income is taxed twice, such as when a corporation is taxed on its profits at the corporate level and then when the corporation pays dividends to shareholders, who are then taxed again on the same income at the personal level. Option A describes multiple levels of government collecting tax, while option B and C are not accurate descriptions of double taxation.

Which of the Following Best Describes Double Taxation