How to record Dividend income

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Hi there,

Company A bought company B last year. Company A is a100% shareholder of company B. company A bought land from the previous owners on an individual basis. Land was recorded on company B balance sheet. Now company A charges rent to company B on a monthly basis since the acquisition. Also started transferring the money from company B to the company A bank. My question is that how to treat this transfer between company B and A? Should it be Dividend for the shareholder company A? If yes, does company A has to pay corporation tax on it? If not treated as dividend in company B how to record this money transfer? any help and guidance would be highly appreciated.

 

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By Tax is always taxing
29th Jan 2024 14:31

No, the company wouldn't pay tax on dividends.
But, if Company A is buying companies and has a group structure, it should also have an accountant - he/she will be able to tell you how to record it correctly and the tax implications.

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By Bobbo
29th Jan 2024 15:16

Bina78 wrote:

company A bought land from the previous owners on an individual basis. Land was recorded on company B balance sheet.

If company A bought the land why is it on company B's balance sheet?

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Replying to Bobbo:
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By Bina78
29th Jan 2024 15:24

Hi
sorry it should have read not recorded on company balance sheet

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By paul.benny
29th Jan 2024 15:50

The rent is, well, rent - should be recorded as income in A and expense in B.

If B is paying to A, why is it making those payments? Is it the rent or for some other services rendered? Is it a loan? If they are regular payments, a dividend seems the least likely explanation.

We can't tell how to record these payments without more information. As tiat says, your accountant should be able to help.

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Replying to paul.benny:
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By Bina78
29th Jan 2024 16:02

Ok thank you

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