Hi Jack, The final tax collected from individuals and Companies isn't the same. Companies have a 25 % - 30 % tax rate whereas Individuals can go from 0 % - 45 % Let's run example - a Company pays a dividend to a individual and that dividend has full 30 % tax credits on it. - the Individual has a 45% tax rate If the ATO didn't tax the individual, the the Individual would be getting $ at a 30 % tax rate while their tax rate is actually 45%. This is why the ATO taxes the Individual. in the above example, the Individual would just need to pay the 15% top up tax (the difference between the Individual's 45% tax rate and the 30% credit received)
But then why is government charging tax to individuals, if the final absolute amount of tax collected from individuals and company is the same?
Hi Jack,
The final tax collected from individuals and Companies isn't the same.
Companies have a 25 % - 30 % tax rate whereas Individuals can go from 0 % - 45 %
Let's run example
- a Company pays a dividend to a individual and that dividend has full 30 % tax credits on it.
- the Individual has a 45% tax rate
If the ATO didn't tax the individual, the the Individual would be getting $ at a 30 % tax rate while their tax rate is actually 45%.
This is why the ATO taxes the Individual. in the above example, the Individual would just need to pay the 15% top up tax (the difference between the Individual's 45% tax rate and the 30% credit received)