Dividend imputation

Ken Henry, the head of Treasury, flags a possible change in the taxation treatment of dividend income. Hmmm; as long as they don't ONLY remove imputation, then it could work. Recall that the arguement for imputation is that it removes the double taxation on dividends; first in the hands of the company as it pays tax on its taxable income, and then in the hands of the investor when it receives that income in the form of a dividend.

Mergers and capital gains tax

We were talking in class this week about the tax implications of using cash vs shares in a takeover. Looks like the relative advantage of using shares (i.e., the deferring of a capital gains tax liability) is under threat. Jane Shultz in The Oz writes:

TAX experts expect a major slowdown in takeover activity due to a controversial change in tax law, despite the federal Government yesterday tweaking its announcement in a move likely to save the demerger of James Packer's Publishing & Broadcasting Ltd.

On Friday, Revenue Minister Peter Dutton suddenly announced changes to the tax consolidation regime that significantly increased the amount of capital gains tax payable when assets bought in a scrip-based takeover were on-sold.