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Taxation laws : Sample Assignment

   

Added on  2021-05-30

18 Pages3947 Words25 Views
Running head: TAXATION LAWTaxation LawName of the StudentName of the UniversityAuthors NoteCourse ID

TAXATION LAW1Table of ContentsAnswer to Task A:.....................................................................................................................2Introduction:...............................................................................................................................2Current system of operations of dividend imputation:...............................................................2Proposal of labour to reform the present system of dividend imputation system:.....................3Benefits under the present dividend imputation system:...........................................................4Potential impact on the taxpayers under the current policy of labour:......................................5Part B:.........................................................................................................................................5The advantages and the disadvantages of the Labor’s Policy:...................................................5Attributes of the good tax system:.............................................................................................7Part C:.........................................................................................................................................8Answer to question 1:.................................................................................................................8Answer to question 2:.................................................................................................................9Answer to question 3:.................................................................................................................9Answer to question 4:.................................................................................................................9Answer to question 5:...............................................................................................................10Conclusion:..............................................................................................................................10Reference List:.........................................................................................................................12Appendix:.................................................................................................................................14

TAXATION LAW2Answer to Task A: Introduction: From a very long time the corporate taxation literature has stated its concerns relatingto the system of the double taxation for the organizational profits. This commonly consists ofthe dividends that are paid after tax is getting levied is getting levied twice on reaching thehands of the shareholders (Balachandran et al., 2016). Under the previous taxation system thereturns that were provided to the company shareholders did not represented the returns thatwere received by them since at the company level it was already taxed. It is understood thatthe shareholders returns were subjected to personal income taxation which is received in theform of dividend and has eventually contributed to the lower returns for the shareholders. Thetraditional taxation system enabled a nation with the chance of lowering the company tax asthey can more competitive in the overseas market in order to make overseas investment in themultinational firms. Current system of operations of dividend imputation: Usually companies that are incorporated are owned by shareholders since they offerthe company with equity shares. Dividends are generally paid by the company in the form ofafter tax profits (Melia et al., 2016). The dividends is regarded as the important element ofassessable income for the shareholders. On noting that taxes are imposed on the shareholdersboth at the company as well as at the personal level then it results in higher amount of taxesliability for the shareholders. The profits that are made by the incorporated companies attaxed at the greater level than the profits at the corporate level. A large number of companieshave made arrangement in order to escape the consequences of double taxation or reduce thetax liability. This is system is known as dividend imputation in Australia.

TAXATION LAW3The present system of dividend imputation works by offering the Australiancompanies with the capability of issuing the franked dividend to its shareholders. Thesedividends are paid from the companies after tax profits that results the shareholders to receivethe after tax dividends and franking credits as well (Balachandran et al., 2017). Thisconstitutes that the company taxes are already paid on the dividends. The present system ofdividend imputation works by allowing the shareholders with the ability of offsetting thefranking credits against their tax liability or alternatively if the ability is exhausted then theshareholders can redeem the franking credits in cash at the Australian taxation office. The current system of dividend imputation works on the values that the return onequity at the company level income should be received as dividends and should be levied fortaxation purpose together with the alternative source of income under the marginal incometax rate (McClure et al., 2018). The current system of dividend imputation is applicable onthe Australian resident and only the Australian citizens would be entitled to franking credits.Additionally the current system of dividend imputationworks by only enabling the Australiancompanies to offer franking credits for the profits that are made from the Australianinvestment. The present system of dividend imputation mandatorily requires an organization tomaintain the records of franking credit accounts which provide the facilities of monitoring thepayments which is made to the Australian taxation office (Stewart, 2017). Under the presentdividend imputation system organizations are prohibited from franking the dividends higherthan the amount of the company tax rate which is paid. Proposal of labour to reform the present system of dividend imputation system: In a declaration made by the labor party there is need for reforming the present systemof dividend imputation. The recent reformation that has been proposed by the labour

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