Franking credits should be axed

Australia’s dividend imputation system promises to remove ‘double taxation’ but, in doing so, it has created problems of its own that are now more damaging than the concern they were supposed to solve. When a business pays a dividend it comes from income that has already been taxed by the corporation and it goes to the pocket of shareholders where it is taxed again. This is double taxation. Franking credits, attached to dividends when companies have paid tax in Australia, are designed to correct this problem and, as a system, it works. Dividend imputation costs $20bn in forgone tax a...

Australia’s dividend imputation system promises to remove ‘double taxation’ but, in doing so, it has created problems of its own that are now more damaging than the concern they were supposed to solve.

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