The United States uses a ________ tax structure and Australia uses a ________ tax structure on shareholder dividend payments.

Question

Quizplus · Accepted Answer

The United States uses a classical tax structure on shareholder dividend payments, while Australia uses a dividend imputation tax structure. This means that in the US, dividends are taxed at the corporate level and then again at the individual level when they are received by shareholders. In Australia, however, the company paying the dividend can attach a franking credit, which allows shareholders to offset the corporate tax that has already been paid on the dividend, resulting in a lower tax burden for the shareholder. This is why Australia is said to have a dividend imputation tax system.

The United States Uses a ________ Tax Structure and Australia