tax break then its incomes thus released from taxation would not generate franking credits precisely because no tax was paid. In turn, this meant that the shareholders received fewer credits along with their dividends, meaning in turn that they had to pay more tax. The net result is that each tax break a corporation itself got was countered by a matching increase in the tax burden of shareholders, leaving shareholders in exactly the same position had no tax break been received by the corporation. Thus, to the extent that corporate directors acted so as to increase shareholder wealth, tax incentives would not influence corporate behaviour. Malta Malta has a dividend imputation system which is applicable to both resident and non-resident shareholders. The corporate tax rate is equivalent to the top tax bracket and the difference will be applied as a tax credit to the individual via imputation. Where the imputation credits exceed the actual tax payable on the grossed up income, the revenues office will refund the remainder. New Zealand New Zealand introduced a dividend imputation system in 1989. It operates on similar principles to the Australian system. A shareholder receiving a dividend from a company is entitled to an "imputation credit", which represents tax paid by the company, and is used to reduce or eliminate the shareholder's income tax liability. United Kingdom From 1973 to 1999, the UK operated an imputation system, with shareholders able to claim a tax credit reflecting advance corporation tax (ACT) paid by a company when a distribution was made. A company could set off ACT against the company's annual corporation tax liability, subject to limitations. In 1999 ACT was abolished. Shareholders receiving a dividend were still entitled to a tax credit to offset their tax liability, but the tax credit no longer necessarily represented tax paid by the company, and could not be refunded to the shareholder. The tax credit was abolished as of 6 April 2016 and replaced with a tax-free dividend allowance of £5,000 (2017/2018). The dividend allowance was reduced to £2,000 from 6 April 2018. See also Corporate tax Dividend stripping, on buying shares to access dividends Dividend tax :fr:Avoir fiscal (in French) References External links Australian Taxation Office guide You and Your Shares 2005, product NAT 2632-6.2005 Australian Taxation Office fact sheet Trans-Tasman Imputation Overview Dividends Corporate taxation Taxation in Australia Taxation in New Zealand Taxation in the United Kingdom