If the Australian government cut the tax rate on dividends to a flat 15 per cent instead of treating dividend payments as other income. All else being equal, how would we expect the number of companies paying dividends to change?

Question

Quizplus · Accepted Answer

If the tax rate on dividends is reduced, companies may find it more attractive to pay dividends to shareholders instead of retaining earnings or pursuing other investment opportunities. This would likely result in an increase in the number of companies paying dividends.

If the Australian Government Cut the Tax Rate on Dividends