Impact of ALP Proposal on Dividend Imputation Tax Policy

Running head: TAXATION LAW
Taxation Law
Name of the Student
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TAXATION LAW1
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................3
Answer to question 3:.................................................................................................................5
Answer to question 4:.................................................................................................................7
Answer to question 5:.................................................................................................................8
References:...............................................................................................................................10

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Answer to question 1:
The issue of dividend imputation tax policy is regarded as the significant policy since
its purpose is to cut down the taxing dividend twice derived from company profits. The
policy is regarded as significant for shareholders since the shareholders can reduce the burden
of overall tax policy by using imputation credits (Wood 2018). A tax concession was created
which allowed few taxpayers and members of superannuation fund to obtain cash refund
from ATO provided that their imputation credit goes further than the amount of tax owed to
them. Because of such modifications, among the OECD nations Australia is regarded as the
only country that has imputation credit system that is fully refundable. It is viewed as
concession that has achieved development a quicker rate and currently has higher cost to
budget which is greater than $5 billion each year.
According to the Australian Labor Party (ALP) cash benefit is regarded as too
generous. Nevertheless, it is very much not clear how the refundable amount would create an
effect on the transfer balance cap on SMSF from 2017. The policy is regarded very much
significant since ALP has made a positive proposal that it has no plans of eliminating the
dividend imputation system (Murphy 2018). This is can be viewed on the positive side
however there is an uncertainty which presently surrounds the dividend imputation system of
Australia. The dividend imputation policy has mostly favoured the domestic companies and
shareholders and it is viewed too generous as compared to the other countries (Dixon and
Nassios 2018). Among the five OECD nations Australia is the only nation that still has the
full dividend imputation system and it is regarded as the only nation that has cash refunds for
excess amount of credits.
The central problem that is surrounding the reformation is that the politicians and the
office-bearers wants to tamper with the possible reason of applying tax on the superannuation

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yet again (Murphy 2018). Customers that are having SMSFs are trying to work out a method
through which they can reduce the effect of transfer balance cap and other tax reformations of
2017. This implies that the added changes are about to come if the ALP is elected in the
upcoming federal election. The constant changes of imposing tax on superannuation has
inevitably effected the confidence of clients in the system reliability.
The proposal stated by the ALP explains that changes which was introduced during
2001 will be overturned, this means that the original dividend imputation system will be
restored back with effect from 1st July 2019 (Stilwell 2016). The main issue that surrounds
this policy is that the excess amount of imputation credits will not be any more paid in the
form of cash refunds.
To assure that the measures does creates any adverse effect on the recipients of
government pensions or allowances, the Australian labor party has explained pensioners
guarantee or a recipient will still be able to get the added credits from the dividend imputation
system in the form of cash refunds (Dixon and Nassios 2016). As per the ALP this policy is
vital in saving tax if it is elected in the upcoming election. The current dividend imputation
system is forecasted to cost greater than $56 billion to the federal government in the next
decade.
Answer to question 2:
The policy has some vital stakeholders which is given below;
a. Governments
b. Individuals
c. Investors
Governments: