The Value of Dividend Imputation Tax Credits
نویسندگان
چکیده
A dividend imputation tax system provides shareholders with a tax credit that can be used to offset personal tax on dividend income. The size of this credit depends on tax paid at the corporate level so that the “double taxation” of dividends is effectively eliminated. This paper shows how to infer the value of imputation tax credits (which is an important input into the weighted-average cost of capital calculation) from the prices of certain derivative securities that are unique to Australian retail markets. We show that in contrast to conventional wisdom, for large companies with substantial foreign investment the market value of these tax credits is close to zero after recent changes to tax laws that effectively prevent their transfer. JEL Classification: G31, G38.
منابع مشابه
The value of dividend imputation tax credits in Australia ¬リニ
A dividend imputation tax system provides shareholders with a credit (for corporate tax paid) that can be used to offset personal tax on dividend income. This paper shows how to infer the value of imputation tax credits from the prices of derivative securities that are unique to Australian retail markets. We also test whether a tax law amendment that was designed to prevent the trading of imput...
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