A tax-accounting device, effective from 1 July 1987, aimed at removing the 'double' taxation of company dividends in Australia.
This refers to the tax credit of 30 cents per dollar an individual receives in their tax return for tax the company paying the dividend has paid. This removes any double taxation of company dividends. (i.e. profits taxed in the company's hands and then taxed as dividends in the individual's hands).
The tax credits passed on to a shareholder who receives a dividend.
A tax system, where dividends paid by a taxpaying Australian company to its shareholders, carry a credit for the tax the company has already paid on its profits. This means that shareholders receive a reduction to the tax normally payable.
The system by which individual shareholders who receive dividends paid out of a company's after-tax profits are entitled to a tax credit for the tax already paid by the company on its income. These tax credits can be used to offset the individual's personal tax liabilities. (see also Investing in shares)
gives investors in companies that pay Australian corporate tax rate (currently 30%) credit for the tax paid by the companies over the next couple of years. This makes dividends from most Australian companies â€œtax freeâ€ to many shareholders. It also reduces the tax payable on income from other sources by low income earners.
New Zealand has a system of dividend Imputation. Where a company has paid tax on its profits, the dividends of that company will carry a tax credit (imputation credit), which entitles shareholders to a rebate or reduction in the net amount of tax to pay. When a company attaches imputation credits, the dividends are referred to as being imputed. Depending on the tax status of the company, dividends are either fully, partially or not imputed.
The tax credit attached to franked dividends.
In order that company earnings are not taxed twice, investors who receive dividend payments may also receive a tax or imputation credit for the tax already paid by the company.
The tax rule that allows dividends to be taxed only once, either by the company or, if the company does not pay tax, by the shareholder.
tax already paid by a company is credited to individual shareholders when a dividend is paid. Want to know more about shares and the benefit of dividend imputation
tax paid at the company level which is credited to individual shareholders. If the company pays full tax on the dividend itâ€™s said to be â€œfully franked
A system whereby tax paid at the company level is credited to individual shareholders. The amount of dividend imputation is determined by assessing shareholders' total dividend and the imputation credit (see below), and then allowing them to claim a tax rebate equal to the imputation credit.
Dividend imputation in the Australian tax system allows companies to attach franking credits to dividends paid. Those credits represent company tax already paid, and for eligible shareholders (see eligibility below) the effect is that distributed company profits are taxed just once at the shareholder's tax rate.