You are a unit holder in Pembina Properties,a real estate investment trust (REIT).The REIT announces a profit of $8 per share,of which it retains $3 for reinvestment and distributes the rest as dividend payments.Given your personal tax rate of 30%,and the tax rate on dividends is 15%,how much tax must you pay per unit?

Question

Quizplus · Accepted Answer

The dividend payment per unit is $5 (=$8 profit - $3 for reinvestment). At a tax rate of 15%, the tax on the dividend payment will be $0.75 (=$5 x 0.15). As a unit holder, you will have to pay tax on the dividend payment, which is $1.20 (=$0.75 tax on dividend x 1.6 units). Therefore, the correct answer is B, $1.20.

You Are a Unit Holder in Pembina Properties,a Real Estate