Under the dividend imputation system of tax,investors will:

Question

Quizplus · Accepted Answer

Under the dividend imputation system of tax, investors receive a credit for the tax the company has already paid on profits distributed as dividends. This means that if the personal tax rate is lower than the company tax rate, investors receive a refund from the government for the excess tax the company has paid. Therefore, investors would prefer the personal tax rate to be less than the company tax rate in order to maximize their after-tax return.

Under the Dividend Imputation System of Tax,investors Will