Dividend Imputation
An arrangement in Australia that eliminates the double taxation of dividends.
Investopedia Commentary
Double taxation of dividends occurs when both a company and a shareholder pay tax on the same income. The company pays taxes on profits and subsequently distributes a dividend out of their after-tax profits. Shareholders must then pay tax on the dividend received.
The tax imputations indicate to the government that the company issuing the dividend has already paid a portion of the tax due. The shareholder is able to reduce the tax paid on the dividend by the amount of the tax imputation credits.
Related Links
How Dividends Work For Investors
The Perks Of Dividend Reinvestment Plans
How and Why Do Companies Pay Dividends?
See also: Cash Dividend, Dividend, Dividend Policy, Dividend Yield, Ex-Dividend, Final Dividend, Interim Dividend, Nominee Dividend, Stock Dividend, Tax Credit