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1) Is it true that dividend income is tax deductible like anybody taking scrip dividends will have tax advantages?
2) if the company has provide bonus issues (free shares to the existing shareholders) then shareholders having bonus share will have more % shareholding in the company?
3) What is EPS dilute (and its meaning) and what causes EPS to dilute?
Please could you explain these to me! Thanks 🙂
1. Dividend income is taxable on the individual receiving it (not tax deductible). Taking a scrip dividend might have tax advantages, but it depends on the tax rules and the individuals tax position.
2. No. All shareholders get given more shares in the ratio to the number they already own. So a shareholders owing 10% of the shares now will still own 10% of the shares after a bonus issue.
3. Dilution of EPS simply means that the earnings are spread over more shares and so the EPS is smaller.
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