Eliminating the Double Tax on Dividends Legal and Practical Issues

Implementation of the full imputation system for taxing distributed company profits raises many practical and legal issues which are explored in this paper. It reviews the practical operation of New Zealand's current company/shareholder tax system, highlights the obstacles to alternative reforms and the hurdles to be overcome with full imputation. In particular, it addresses the problems associated with international investment through companies, tax treaty obligations, treatment of corporate tax preferences and the issue of capital gains on company shares.