MLC301 Lecture Notes - Lecture 9: Legal Personality, Income Tax, Dividend Imputation

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1 Aug 2018
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Week 9: topic 6 taxation of individuals, shareholders, beneficiaries and partners: Income tax is payable by each individual and company, and by some other entities (s4-1). Taxation of companies: calculated in similar way to individuals except flat rate of 30% applies. June 1987 legislation put into effect a system whereby company dividends cn be franked with a share of the tax already paid by the company. This franked amount is then allowed as a rebate or credit to the shareholder receiving the franked dividend. Dividends are still assessable income for the shareholder, but the rebate is received for the tax already paid by the company on its own income (avoids double taxation): shareholder perspective: = 70 x (0. 3 / (1-0. 3)) = 30. If the shareholders rate of tax is below the company rate, a net credit is received which the tp can use to reduce tax on other income e. g. wages: taxation of trustees and beneficiaries.

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