Generally, investment return is treated as capital gain, and capital gain is not taxable.

But if a person use the investment tool to trade upon to make a living, eg. a broker trade stock in the market to make a living, then it is considered trading profit, and trading profit is taxable.

Imputation dividend (tax credit system) already became a history.
From 2014 onwards, all dividends are single tier (aka tax exemption in the hand of shareholders) as it is already taxed at company level.

It depends on your wife whether she is trading the stock typically like constantly with high volume daily/monthly or in other word, trading stock is becoming like her job, or just buy and hold type for investment.

3K relief is for wife not working, if she works as stock trader, then clearly it will be not entitled to claim the relief.

Whilst dividend from stocks is single tier which is tax exempted.

You need to distinguish the difference in term of the income definition.

If lhdn define yr stock income as trading...then ?

Paying a hefty income tax and capital gain/stock trading is two different matter.

If IRB deem your capital gain as an income then you will be fine plus the tax rate for that year of assessment.

well, they can send a letter to your wife to ask for source of 'fund'. once she can prove it, source of fund from you. then they will turn to you to check your income. if your wife shows fund from you 500k, but your income tax form stating 50k a year. good luck.