Georgia Limited paid a fee for consulting services of $260,000 toa spouse of one of its directors. The director's spouse is not a shareholder Georgia Limited. The Commissioner of Inland Revenue decided that 45% of the fee is unreasonable. Which of the following are not the correct taxation implications of the payment of the fee?

I. The director's spouse is subject to income tax on the total amount of $260,000 of fees received
II. 45% of the fees of $260,000 is treated as dividend paid by Georgia Limited
III. 55% of the fees of $260,000 is treated as dividend paid by Georgia Limited
IV. The director's spouse is not subject to income tax on the total amount of $260,000 of fees received

Select one:
a).  I and III only
b). III and IV only
c). II and IV only
d). I and II only

Answer rating: 100% (QA)

I and III only The correct taxation implications of the payment of the ... View the full answer