Tristan, here we go again. Tax and spend. Tax concessions are in place to encourage behaviour. Increasing taxes means people stop building houses, etc.

The GST is the most efficient tax and while regressive collects more money without damaging the economy than any other tax.

May I ask a question please:

What do they mean by "removing dividend imputation"?

If one's company receives income on the 30th of June, so the owner was unaware of it on the day that it arrived or had no time yet to collect it as dividend, would it then be taxed twice - once in company-tax and once in the next financial-year when the owner actually takes that money?

Dividend imputation means your tax is cut on your dividends to avoid 'double taxation'; ie: first from Company Tax and then from tax on income from dividends. Australia is one of the only countries in the world to do it.

Dear Tristan,

So are you saying that tax should not be cut, so if I paid it already through my company I still need to pay it again in my private capacity?

Say my company received the money for its annual contract on the 30th of June and say I could not tell in advance what exact date that money would arrive, then because the ways the banks work I see that sum in my company's bank account only on July 1st (but dated June 30th) - so too late, it's been an income for the previous financial year, on which my company pays 30%, then when I take home the remaining 70% on the next day, I receive no refund for the tax I already paid and in the next financial year I must pay my full personal marginal rate on the remaining 70%.

Or say I was not quite sure whether my company would need that money for its expenses and future investments, then I find that it won't need it and take it home, but by then the financial-year line was crossed and I need to pay twice for the same income.

Do you consider it fair?

Tristan,

Dividend imputation is far more common than you make out. To avoid double taxation one either does not tax dividends with company tax, or you give credits to taxpayers. Dividend imputation avoids double tax and tax evasion.

Unless of course you simply prefer double taxing investors such as pensioners.

Its possible to avoid hitting pensioners unfairly by increasing pensions and easing means tests. And still hit the dividends of the rich.