It is ethical. Acknowledging the original author’s work is the right thing to do and shows them respect.
It acts as a reference and shows your understanding to others. Good paraphrasing and referencing allows readers to look at the source text to further explore the ideas. It also shows readers/assessors how much reading you have done and how much you understand those ideas.
It helps your own understanding. By putting others’ ideas into your own words and integrating them into your own writing, you are processing the information in a more meaningful way.
It is following the rules. If you do not follow these rules, you can be accused of using unfair means by the university.
When should you paraphrase?
The choice of when to paraphrase a source text is up to you. It could depend on:
Importance of the original idea within the field (does it matter?)
Relevance of the ideas to your essay, report, answer or dissertation (is it connected to my argument?)
Place in the text(does it fit well into a particular section?)
Quotes (Do I have too many quotes? Could a paraphrase fit better into my argument?)