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Sample Assignment on Taxation Law (doc)

   

Added on  2021-06-17

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Finance
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Running head: TAXATION LAWTaxation LawName of the StudentName of the UniversityAuthors NoteCourse ID
Sample Assignment on Taxation Law (doc)_1

TAXATION LAW1Table of ContentsAnswer to task A:.......................................................................................................................2Introduction:...............................................................................................................................2Existing system of dividend imputation:....................................................................................2Labours proposed reform to the dividend imputation system:...................................................3Benefits under the current system:.............................................................................................4Probable effects on the taxpayers under the labour policy:.......................................................5Part B:.........................................................................................................................................6The advantages and the disadvantages of the Labor’s Policy:...................................................6Attributes of the good tax system:.............................................................................................8Part C:.........................................................................................................................................9Answer to question 1:.................................................................................................................9Answer to question 2:.................................................................................................................9Answer to question 3:.................................................................................................................9Answer to question 4:...............................................................................................................10Answer to question 5:...............................................................................................................10Conclusion:..............................................................................................................................11Reference List:.........................................................................................................................12
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TAXATION LAW2Answer to task A: Introduction: The literature in the corporate taxation has from a long time expressed concerns onthe system of double taxation of the company profits. This generally refers to the after taxdividends that gets taxed twice in the hands of the shareholders of company. Under thetraditional system of taxation the returns of the shareholders from their investment in thecompanies were not the returns that they received from the companies as dividends that werealready taxed at the company level (Miller & Oats, 2016). As a matter of fact the returns ofthe shareholders are also subjected to personal income tax that is received on the dividendshas led to very low realised return for the investors. In other words the classical system oftaxation provided the country with the scope of reducing the corporate tax so that they can bemore competitive in the international markets for the purpose of investment by themultinational companies. Existing system of dividend imputation: An incorporated company is generally owned by the shareholders that provide thecompany with the share capital. Companies usually pay dividends to the shareholders in theform of after tax profits. The dividends forms the vital part of the return for the shareholders.When the shareholders received dividends they are held as taxable earnings (Keen & Mullins,2017). If the return on shareholders’ equity is levied both at the company level and thepersonal income level then it is taxed at a much higher level than the other forms of income.The profits of the incorporated companies would be levied at a higher level of tax than in thecompanies that are incorporated. Majority of the company have made arrangements to avoidor lower down the double taxation of the company income. In Australian, this system isknown as the dividend imputation system.
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TAXATION LAW3The current dividend imputation system operates by providing the Australian firmswith the ability of issuing franked dividends to the shareholders. The dividends are paid fromthe after tax profit of the company for which the shareholders received the after tax dividendand the franking credit (Fleurbaey & Maniquet, 2017). This represents that the corporate taxis already paid on the dividends. The current system of dividend imputation allows theshareholders to offset the franking credits against the tax liability of the shareholders or giventhat ability is exhausted the shareholders can redeem in cash from the Australian taxationoffice. The presentation system of imputation credits operates on the principles that the returnon equity to the company income must be received as the dividends and should be taxedtogether with the other source of income based on the taxpayer’s marginal income tax rate(Woellner et al., 2016). Under the present system of dividend imputation only the Australianresidents are held eligible for the franking credits and only the Australian companies canprovide the franking credits on the profits from the Australian based investment. The current dividend system requires companies to keep accounts of the frankingcredits accounts that helps in keeping track of the payments that is made to the AustralianTaxation Office (Anderson et al., 2016). Under the current system of dividend imputationcompanies are not allowed to frank the dividends greater than the sum of corporate incometax that has been paid. Labours proposed reform to the dividend imputation system: The labour party has made a declaration of reforming the current system ofAustralia’s dividend imputation system. In the reformations proposed by the labour itincludes removing the ability of the individuals and the superannuation funds to receive arefund of the extra amount of franking credits by making imputation credits as the non-refundable tax offset (Barkoczy, 2016). However, such reformation is not proposed to beimplemented on the charities and not-for-profit organizations.
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