Paul Keating backs Labor over dividend imputation windback
Mar 13, 2019: Former Labor PM and ‘father’ of dividend imputation, Paul Keating, has backed the opposition’s proposal to abolish cash refunds for shareholders who pay little or no tax.
Dividend imputation – history
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. More specifically, it is intended to create a ‘level playing field’ by taxing the same activity in the same way, irrespective of the business structure being used, namely a company or trust, sole trader or partnership.
Dividend imputation was introduced in 1987, one of a number of tax reforms by the Hawke–Keating Labor Government. Prior to that a company would pay company tax on its profits and if it then paid a dividend, that dividend was taxed again as income for the shareholder, i.e. a part owner of the company, a form of double taxation.
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