Investopedia

Continue to Site »

Dividend Imputation

Filed Under » , , , ,
Dictionary Says

Definition of 'Dividend Imputation'

An arrangement in Australia and several other countries that eliminates the double taxation of cash payouts from a corporation to its shareholders. Australia has allowed dividend imputation since 1987. Through the use of tax credits called "franking credits" or "imputed tax credits," the tax authorities are notified that a company has already paid the required income tax on the income it distributes as dividends. The shareholder then does not have to pay tax on the dividend income. Finland, Italy, Mexico and New Zealand also have dividend imputation systems.
Investopedia Says

Investopedia explains 'Dividend Imputation'

In any other country, corporate dividends are taxed twice. 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 its after-tax profits. Shareholders must then pay tax on the dividend received. The double taxation system can cause corporations to prefer debt over equity, makes companies more likely to retain their earnings, and drags down economic growth.

Articles Of Interest

  1.

    How To Use The Dividend Capture Strategy

    Dividend capture strategies provide an alternative investment approach to income seeking investors.

  2. Dividend Tax Rates: What Investors Need To Know

    Find out how legislation enacted in 2003 is benefiting both investors and corporations, and when it's scheduled to expire.

  3. Due Diligence On Dividends

    Understanding dividends and how they work will help you become a more informed and successful investor.

  4. The Perks Of Dividend Reinvestment Plans

    These plans offer shareholders a way to directly invest in some of the top companies without the commissions.

  5. How To Owe Nothing On Your Federal Tax Return

    You have the control to determine whether you owe in April. Learn more here.

  6. Why Dividends Matter

    Seven words that are music to investors' ears? "The dividend check is in the mail."

  7. Your Dividend Payout: Can You Count On It?

    We go over several telling factors that can help you answer this question and avoid losses.

  8. How Dividends Work For Investors

    Find out how a company can put its profits directly into your hands.

  9. How And Why Do Companies Pay Dividends?

    Explore arguments for and against company dividend policy, and learn how companies determine how much to pay out.

  10. Investing In REITs Instead Of Property

    Learn why this one particular REIT is a better investment than holding physical property in your retirement portfolio.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  2. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  3. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  4. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  5. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  6. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.
Trading Center
Array ( )
taggroups(for debug only):
Array ( [0] => Taxes [1] => SEG (Business Owners) [2] => SEG (Business Owners:TaxType-Business) [3] => Investing [4] => SEG (Investors) [8] => Personal Finance [9] => SEG (Head Of Households) [10] => SEG (Head Of Households:Topic-Taxes) [11] => SEG (Head Of Households:TaxType-Personal) ) time:10ms