Originally Posted by
Scrunch
I bought during the Covid dip so I haven't had a dividend from them yet, but my understanding of PIE's was that the correct tax is deducted so that you don't need to pay any further tax. That's what's happened on PIE interest income I've received so I'm assuming its the same for dividend income. What is received is free of any further tax. If you are a 28% PIE and there is full 28% imputation credits, no further tax would need to be paid. The full value would be received (10,000 shares and a 3.5c dividend would be a $350 payment).
If a 3.5c dividend was paid with no imputation credits, a shareholder with a 28% PIE would only receive $252, it would be excluded income so the shareholder can exclude the income from their tax return and avoid a further 5% (or soon 11%) tax on the income as its moved to 33% or 39%. It is not however untaxed, the taxation just happens before being received. The lack of imputation credits in this example has caused $98 to go to the taxman. The $252 received as a PIE is however better than a normal company dividend with no imputation credits which would be $234.5 (or $213.50 if hit by the new 39% tax rate).
The Nov 2019 dividend of 3.5c had 2.03c with full imputation credits and 1.47c was "excluded income". My guess is therefore that 0.41c of tax (28% if 1.47c) was deducted from the excluded income before being received. The cash received was 3.09c/share and it was tax paid income ($309 for the shareholder with 10,000 shares). If it was actually 3.5c - bonus!!