Question

Dividends are usually paid on ___________.

• A. Authorised capital
• B. Issued capital
• C. Called-up capital
• D. Paid-up capital

Answer 1

The correct option is D Paid-up capital

A capital dividend is typically not taxable for shareholders, as it is viewed as a return of the capital that investors pay in. Additionally, by paying out dividendsfrom retained earnings, a company's struggles may worsen as its capital base shrinks, limiting investment and business opportunities in the future.