Dividend imputation

franking creditfranking creditsimputationimputation credit
Dividend imputation is a corporate tax system in which some or all of the tax paid by a company may be attributed, or imputed, to the shareholders by way of a tax credit to reduce the income tax payable on a distribution.wikipedia
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Corporate tax

corporation taxcorporate income taxbusiness tax
Dividend imputation is a corporate tax system in which some or all of the tax paid by a company may be attributed, or imputed, to the shareholders by way of a tax credit to reduce the income tax payable on a distribution.
This may be accomplished by "imputation systems" or franking credits.

United Kingdom corporation tax

corporation taxUK corporation taxUnited Kingdom
Chile, Canada, Korea and the United Kingdom have a partial imputation system.
Originally introduced as a classical tax system, in which companies were subject to tax on their profits and companies' shareholders were also liable to income tax on the dividends that they received, the first major amendment to corporation tax saw it move to a dividend imputation system in 1973, under which an individual receiving a dividend became entitled to an income tax credit representing the corporation tax already paid by the company paying the dividend.

Paul Keating

KeatingKeating GovernmentPaul John Keating
Dividend imputation was introduced in 1987, one of a number of tax reforms by the Hawke–Keating Labor Government.
These included the Prices and Incomes Accord, the float of the Australian dollar, the elimination of tariffs, the deregulation of the financial sector, and reform of the taxation system (including the introduction of capital gains tax, fringe benefits tax, and dividend imputation).

Dividend

dividendsstock dividendcash dividend
The Australian tax system allows companies to determine the proportion of franking credits to attach to the dividends paid.
Australia and New Zealand have a dividend imputation system, wherein companies can attach franking credits or imputation credits to dividends.

Bob Hawke

HawkeHawke governmentRobert Hawke
Dividend imputation was introduced in 1987, one of a number of tax reforms by the Hawke–Keating Labor Government.
Partially offsetting these imposts upon the business community—the "main loser" from the 1985 Tax Summit according to Paul Kelly—was the introduction of full dividend imputation, a reform insisted upon by Keating.

Advance corporation tax

Advance Tax
From 1973 to 1999, the UK operated an imputation system, with shareholders able to claim a tax credit reflecting advance corporation tax (ACT) paid by a company when a distribution was made.
In the United Kingdom, the advance corporation tax (ACT) was part of a partial dividend imputation system introduced in 1973 under which companies were required to withhold tax on dividends before they were distributed to shareholders.

Dividend tax

taxes on dividendstax on dividendsDividend
Australia, like New Zealand, has a dividend imputation system, which entitles shareholders to claim a tax credit for the franking credits attached to dividends, being a share of the corporate tax paid by the corporation.

Dividend stripping

cum-exdividend strip
Dividend stripping by investors has the general advantages or disadvantages described above, but in addition in Australia there are franking credits attached to dividends under the dividend imputation system.

Theory of imputation

imputedimputationImputation (economics)
Dividend imputation is a corporate tax system in which some or all of the tax paid by a company may be attributed, or imputed, to the shareholders by way of a tax credit to reduce the income tax payable on a distribution.

Tax credit

tax creditsrefundable tax creditcredits
Dividend imputation is a corporate tax system in which some or all of the tax paid by a company may be attributed, or imputed, to the shareholders by way of a tax credit to reduce the income tax payable on a distribution.

Australia

AUSAustralianCommonwealth of Australia
Australia, Malta and New Zealand have imputation systems. In Australia and New Zealand the end result is the elimination of double taxation of company profits.

Malta

MalteseMaltese IslandsRepublic of Malta
Australia, Malta and New Zealand have imputation systems.

Chile

Republic of ChileChileanCHI
Chile, Canada, Korea and the United Kingdom have a partial imputation system.

Korea

KoreanKorean PeninsulaSouth Korea
Chile, Canada, Korea and the United Kingdom have a partial imputation system.

Taxation in Germany

solidarity surchargeGerman tax systemGermany
Germany had a dividend imputation system until 2000 and France until 2004.

Taxation in France

FranceGeneral Social Contribution (CSG)tax
Germany had a dividend imputation system until 2000 and France until 2004.

Double taxation

double-taxationdouble taxdouble tax treatment
The objective of the dividend imputation system is to eliminate double taxation of company profits, once at the corporate level and again on distribution as dividend to shareholders. In Australia and New Zealand the end result is the elimination of double taxation of company profits.

Company

companiesenterpriseenterprises
A franking credit is a nominal unit of tax paid by companies using dividend imputation.

Shareholder

shareholdersstockholderstockholders
Franking credits are passed on to shareholders along with dividends.

Income tax in Australia

income taxAustralian-resident shareholdersAustralian income tax system
Australian-resident shareholders include in their assessable income the grossed-up dividend amount (being the total of the dividend payable plus the associated franking credits).

Income

incomesearningsearning power
Australian-resident shareholders include in their assessable income the grossed-up dividend amount (being the total of the dividend payable plus the associated franking credits).

Income tax

income taxesincometaxes
The income tax payable by the shareholders is calculated, and the franking credits are applied to offset the tax payable.

New Zealand

NZLNZKiwi
In Australia and New Zealand the end result is the elimination of double taxation of company profits.