What is Dividend Imputation?

Dividend imputation is a tax system aimed at eliminating double taxation of dividends, where corporations and shareholders both incur tax on the same income. This approach provides tax credits to shareholders, allowing them to reduce their taxable income based on taxes already paid by the corporation. This video explores how the imputation system works, its benefits for investors, and its introduction in Australia in 1987. We’ll also discuss the implications for personal tax rates and the importance of encouraging equity financing through reduced tax burdens.

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