INCOME TAX 
329 
When adjustments are made in respect of relief granted to 
shareholders of Dominion companies by means of a reduced 
deduction of United Kingdom tax, the gross dividends are 
recalculated by reference to the actual rate of relief applicable 
to the shareholders’ dividends in question, and United King- 
dom tax is charged at the correct rate on the new ‘gross.’ 
The British Revenue Authorities take the view that in the 
case of preference shareholders of a Dominion company, if the 
preference shares are entitled to a dividend at a fixed rate 
without further participation in profits and the dividends are 
paid at the full fixed rate without deduction of Dominion 
income tax, no relief is allowable in respect of any Dominion 
income tax paid by the company. 
Shareholders frequently ask officials of companies to explain 
the basis on which relief is granted, and they are especially 
puzzled when an Inspector of Taxes sets off against an amount 
of tax repayable an item termed ‘ Dominion relief over-allowed. 
Seeing that the individual's ‘appropriate rate’ of United 
Kingdom tax is the factor which in most cases determines the 
rate of relief allowable, the two following examples will serve to 
illustrate the manner in which this rate is arrived at: — 
Taxable Income. 
£33 
[A 
~ - p 
i 
-~ pe 
7.8 % 5 
Uw 
426 
4. (Appropriate rate say 3s. 7a.) 
B 
1000 
Taxable Incom 
£225 
2000 
5400d. 
960004. 
I0I400d. 
Rate of Income Tax ( 
For the preceling vear ¢* 
to £87 10s. =.' + 7 
Tax rate is th 
The appre, 
and 7d. Sur 
] 
Sa == 45'57d. ) 3s. 10d. 
Assessment Sur Tax amounting 
« income of f3000. The Sur 
ar, Pram 
~d. (3s. 10d. Income Tax