Some countries, such as Australia, Canada, and the UK, have removed the double taxation and adopted a dividend imputation
system where the amount of tax charged at the firm's level will be credited back to the stockholders when they receive cash dividends.
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.
C](*) measures corporate marginal tax benefits and is a function of statutory tax rates, nondebt tax shields, the probability of experiencing a loss, international tax rules about dividend imputation
and interest allocation, organizational form, and various other tax rules.
One such mechanism is the dividend imputation
system, or shareholder credit system, which has been used in other developed countries and which was the integration approach advocated by the AICPA in the mid-1990s.
IMPCRED = imputation credit availability; this indicator variable equals 1 for observations from countries that have a dividend imputation
credit, 0 otherwise;
Since 1987, Australia has had a dividend imputation
tax system, which is a marked change from the classical system existing before that time and which exists in a number of countries such as the United States.
Imputation system: New Zealand's dividend imputation
system enables a resident company to allocate to shareholders a credit for New Zealand income tax.
the process of dividend imputation
, which largely eliminates any personal taxation on dividends (see Smith, 1993, for a comprehensive discussion of this process)
1994, Capturing Value from Dividend Imputation
, McKinsey and Company, Sydney.
The ex-dividend day behavior of Australian share prices before and after dividend imputation
Prediction 14 The tax incentive to issue debt decreases with the degree of dividend imputation
dictated by the tax law under which a company operates.