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A Measure of the Efficacy of the Australian Imputation Tax System *
Author(s) -
HANDLEY JOHN C.,
MAHESWARAN KRISHNAN
Publication year - 2008
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2008.00448.x
Subject(s) - imputation (statistics) , economics , dividend , double taxation , tax credit , value added tax , econometrics , actuarial science , missing data , public economics , finance , statistics , mathematics
We examine the efficacy of the Australian imputation tax system in eliminating the double taxation of dividends. Using Australian Taxation Office data, we find that, on average, 67 per cent of distributed imputation credits were used to reduce personal taxes during 1990–2000, but this has increased to 81 per cent over 2001–2004. Overall, the policy shift to an imputation tax system has resulted in a significant elimination of double taxation. Our results are relevant not only to the ongoing policy debate concerning the efficacy of integration tax systems, but also to equilibrium asset pricing models that require an estimate of the value of imputation credits.