You hold 1,000 units of Calgary Commercial Property,a real estate investment trust (REIT).The REIT announces a profit of $10 per share,of which it retains $4 for reinvestment and distributes the rest as dividend payments.Given your personal tax rate of 40%,and the tax rate on dividends is 15%,how much tax must you pay on your holdings?

Question

Quizplus · Accepted Answer

The total dividend payment per share is $6 ($10 profit - $4 retained for reinvestment). As you hold 1000 units, your total dividend income is:
$6 * 1000 = $6,000
Your personal tax rate is 40%, so you need to pay:
$6,000 * 40% = $2,400
The tax rate on dividends is 15%, but this does not affect the calculation as the amount of tax paid is determined by your personal tax rate. Therefore, the correct answer is C) $2,400.

You Hold 1,000 Units of Calgary Commercial Property,a Real Estate