Are Dividend paid on preference shares treated as finance cost or are they treated as dividend itself?
I'm asking is because as per ifrs dividend paid on preference shares are to be treated as finance cost if that is the case then the company gets a tax shield on preference shares as well but while computing cost of preference shares we don't a l l o w for tax shield. dividend paid is treated as a distribution of profit as per financial management but it is treated as finance cost as per ifrs.
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Preference shares
9y ago#1What you are asking about is the tax treatment, which is separate from the accounting treatment.
There is never a tax shield on preference dividends - dividends are not tax allowable for the company whether ordinary or preference dividends.
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