Imputed dividend

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What is Imputed dividend? How imputed dividend is calculated?

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Double taxation of dividends occurs when both a company and a shareholder pay tax on the same income. The company pays taxes on profits and subsequently distributes a dividend out of their after-tax profits. Shareholders must then pay tax on the dividend received. 

The tax imputations indicate to the government that the company issuing the dividend has already paid a portion of the tax due. The shareholder is able to reduce the tax paid on the dividend by the amount of the tax imputation credits.


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