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Cost of preference share

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Cost of preference share

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.
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  • May 8, 2014 at 4:35 pm #167944
    pakistan098
    Member
    • Topics: 10
    • Replies: 16
    • ☆

    hi,
    why we not deduct tax from interest rate while calculating the cost of preference share. even for redeemable preference shares.

    May 9, 2014 at 10:31 am #168015
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    There is no tax saving on dividends, whether they are ordinary shares or preference shares.

    This is a tax rule from Paper F6.

    (Although we treat redeemable preference shares as though they are debt borrowing for financial accounts presentation purposes, they are still shares and the dividends do not get tax relief)

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