SMALL investors can breathe easy. Treasury boss Ken Henry has revealed his Henry Tax Review won't be doing away with dividend imputation.
The announcement, in a speech delivered to the Australia New Zealand Leadership Forum in Sydney, brings to an end months of speculation about abolishing the concession on the ground that it provided a benefit to Australian-based shareholders not available to foreign-based shareholders.
Over 20 years it has ensured that investors in Australian firms such as Telstra, BHP and Coles Myer paid little or no income tax on their dividends in those in years in which the companies paid the full rate of company tax.
Lateral Economics has told the Henry Review that axing dividend imputation would free up $20 billion a year, enough to fund a cut in Australia's corporate tax rate from 30 per cent to 19 per cent.
PETER MARTIN