Labour’s Dividend Imputation Policy: A Double Tax Grab?

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Why is Labour’s dividend imputation policy a double tax grab?

Image Credit: Dan Pele AAP Image

The dividend imputation system is devised to stop income being taxed twice. Such refunds come about because the tax rate in superfunds is 15% for the accumulation stage to Zero for the pension stage. This policy is harsh because it is inconsistent with taxpayers who have received a salary or wage and have paid group tax.

If the result is a refund of group tax regardless of the nature of the business structure or the level of income, then why should the taxpayer who has chosen investment income dividends (imputation credits) be discriminated against and be refused a rightful refund?

This tax grabbing discriminatory policy applies to all non-age pensioner SMSF accumulated Superfunds with large balances over 3.2m and pension mode of all sizes.

In summary the company pays the tax on behalf of the residential shareholders.

The shareholders receive the imputations and lodge a return and receive a refund of the imputation credits regardless of whether they are receiving an old age pension or not.

However; under Labour’s policy, people who own shares in a company and receives imputation credits along with SMSF under identical conditions are treated differently.


Why DISCRIMINATE against people with superfunds and structures which owns shares?

For example, persons who earn $20,000 or less but do not have shares to produce income will not pay tax because either the group tax covers the all of the tax liability or they were not due to pay tax anyway.

However, if a retiree produces income from Australian shares, say $20,000, he will receive $14,000 with dividend imputation credit of $6,000.

Currently he would receive a full refund of $6,000 and so he should. It is like getting a group tax refund. The principal is exactly the same. It is grossly unfair on the shareholders.

Most small business accountants or financial planner in Brisbane can tell you more about the dividend imputation system and how it affects you. Speak to your local tax services specialist or get in touch today on 07 3357 3300.

Image Credit: Dan Pele AAP Image