Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

Should Australia pay for lower company tax by abolishing dividend imputation?

By Geoff Carmody - posted Tuesday, 8 July 2014

Vale Australian dividend imputation? Some say a company tax cut from 30% to 20% is possible without it.

Australian investors were furious when told the 1.5% Paid Parental Leave levy part financing the Government's PPL policy would be un-franked. How would they react to abolition of imputation altogether?

Assume company tax drops from 30% to 20%, with no imputation. Under current personal tax rates, Australian investors' total tax on franked dividends would increase by between 10.2 and 20 percentage points. Lower income earners are worst affected. Super fund earnings tax increases between 17% (accumulation phase) and 20% (pension phase). See chart.


Foreign residents' tax on Australian franked dividends drops 10 percentage points (33%).

Chart. Cutting company tax from 30% to 20% and abolishing dividend imputation: who pays? *

* In this chart, personal tax rates include personal income tax, the Medicare levy, the NDIS levy, and the deficit levy.

Source: Geoff Carmody & Associates.



Why tax Australian shareholders more to finance tax cuts to foreign shareholders?

There is no equity case, especially for lower income Australians.

Is this efficient? Certainly, efficiency questions abound.

  1. Pages:
  2. Page 1
  3. 2
  4. All

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

2 posts so far.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

Other articles by this Author

All articles by Geoff Carmody

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 2 comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy