Business, Management and Accounting
4 years ago

Tax loophole allows tax-free extraction of company profits, exploiting income tax system.

2 views
Deemed Dividend Rules: Tax Free Extraction of Profits and the Exploitation of Structural Foundations of the Income Tax Regime
Dale Boccabella, Kayleen Manwaring

Paper Summary

The article discusses how tax rules can be used to extract profits from a company in a tax-free or favorable way. By exploiting a design flaw in the tax system, individuals can release income without paying taxes. This loophole allows for tax planning strategies that may bypass normal tax obligations. The article explores how this strategy works and questions its long-term success.

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