It is similar to the "franking" mechanism that countries with dividend imputation
systems use to show that exempt dividends are paid out of income that was in fact subject to corporate-level tax.
The dividend imputation
system has had a yet more long-standing effect on income distribution.
the process of dividend imputation, which largely eliminates any personal taxation on dividends (see Smith, 1993, for a comprehensive discussion of this process)
When Capital Charging was first contemplated, dividend imputation had not yet been introduced in New Zealand.
1993), "Comprehensive Dividend Imputation, Neutrality and Double Taxation of Corporate Profits", The Bulletin For International Fiscal Documentation, 47, No.
1994, Capturing Value from Dividend Imputation
, McKinsey and Company, Sydney.
However, the level of franking for future dividends will depend on a number of factors including the proportion of Australian and offshore profits and any changes to the current dividend imputation system.
In the Federal Government's proposed tax reform package, changes to the dividend imputation system were foreshadowed.
With the introduction of dividend imputation, taxable domestic investors receive a tax credit equal to the amount of corporate tax paid.
ii) Dividend imputation was introduced from 1 July 1987.
The Australian dividend imputation system is characterised as follows.
Further insight into the distribution of direct share ownership can be gained by examining the distribution of dividend imputation