Which of the following statements regarding the imputation tax system is INCORRECT?
A)It minimises double taxation.
B)Shareholders are given credit against their personal tax for the tax paid by the company.
C)The imputation system is used in Australia.
D)It reduces the amount of tax a company must pay.

Question

Quizplus · Accepted Answer

The imputation tax system is designed to prevent double taxation, not to reduce the amount of tax a company must pay. Under the imputation system, a company's shareholders receive a credit against their personal tax liability for the tax paid by the company. This system is used in Australia and helps to ensure that company profits are taxed only once.

Which of the Following Statements Regarding the Imputation Tax System