Imputation system simplified

The Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, announced that the Government will introduce legislation today to implement a new simplified imputation system.

The imputation system governs how and when income tax paid by companies and certain other entities is imputed to their shareholders. It is also known as franking.

Senator Coonan said the simplified imputation system would apply from 1 July 2002.

"It forms part of the Government's response to the Review of Business Tax recommendations to reform the imputation system and simplify the franking process for companies," Senator Coonan said. Since the release of earlier exposure draft legislation, the measure has benefited from consultation with representatives of small and large business.

"Simplifying the imputation system will reduce compliance costs as the simpler rules will be easier to understand and apply.

"The measure also gives more flexibility for companies in franking their dividends to shareholders.

"Under the new legislation companies will be able to provide more certainty to shareholders about their likely franking policies in relation to future dividends."

While the measures will simplify and change the way the imputation system is applied by companies, they will not impact on the tax treatment of dividends received by individuals.

Legislation introduced today contains the core imputation provisions as they apply to companies and their shareholders. Some other rules dealing largely with consequential amendments arising from the new system will be included in later Bills.

To assist companies and their tax advisers implement the simplified imputation system the Tax Office has developed a number of information fact sheets. These fact sheets will be available on www.taxreform.ato.gov.au.

Queries can also be directed to the Business Tax Reform Hotline on 13 24 78.

The Tax Office will also conduct seminars explaining the operation of the new rules in Sydney and Melbourne on 19 and 20 June 2002 respectively.

Further information regarding these seminars, including registration details, are available at http://taxseminars.com.au/sis.asp .