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Dividend stripping or cum-ex trading can be used as a tax avoidance strategy, [1] enabling a company to distribute profits to its owners as a capital sum, instead of a dividend, which offers tax benefits if the effective tax rate on capital gains is lower than for dividends. For example, consider a company called ProfCo wishing to distribute D ...
Slutzkin v Federal Commissioner of Taxation, [1] was a High Court of Australia case concerning the tax position of company owners who sold to a dividend stripping operation. The Australian Taxation Office (ATO) claimed the proceeds should be treated as dividends, but the Court held they were a capital sum like an ordinary investment asset sale.
The way the promoter paid the owners for undistributed profits was similar to a dividend strip operation. In any case the amount the promoter paid was a tax deduction (since the promoter would be in the business of buying and selling shares) and the dividend would be taxable income , leaving just the promoter's commission taxable, not the whole ...
Australia's banking watchdog plans to update next week a capital return policy that has halted dividend payments by banks because of the coronavirus crisis, offering them capital management ...
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Australia's financial watchdog on Wednesday withdrew a request for banks and insurers to freeze dividends due to the novel coronavirus, but ordered them to pay less than half their profit to ...
A company would report and pay tax at the company tax rate in the normal manner. The company would keep track of the company tax it has paid in a franking account.If and when the company distributes money to shareholders in the form of dividends, it would indicate to shareholders the amount of franking credits it has applied to the dividend, and deduct the amount from its franking account.
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Over the past 3 years, Australian Finance GroupRead More...