According to the Corporations Act, dividends can only be paid out of the profits earned by a company.

Name: According to the Corporations Act, dividends can only be paid out of the profits earned by a company.
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The Corporations Act allows dividends to be paid out of the company's profits or other sources, as long as the company's assets exceed its liabilities before the dividend is paid and the payment does not materially prejudice the company’s ability to pay its creditors.

According to the Corporations Act, Dividends Can Only Be Paid