Policy Forum: A Few Observations on Managing the Taxation of Corporate Groups - The Australian Experience
Graeme S. Cooper
University of Sydney - Faculty of Law
Canadian Tax Journal/Revue Fiscale Canadienne, Vol. 59, No. 2, pp. 265-294, 2011
Sydney Law School Research Paper No. 11/36
Regimes for aggregating the position of related entities are undertaken for a variety of seemingly worthwhile reasons. Even if the regimes turn out not to be effective, they are nevertheless usually considered relatively harmless aspects of a tax system, perhaps adding a touch of desirable realism to corporate taxation. The Australian experience - attempting and then abandoning its aggregation system, and then starting again - shows, however, that these rules can be dangerous: aggregation rules working in combination can lead to outcomes that are not welcomed by government. A country contemplating an aggregation regime must therefore make a judgment as to whether it is possible to enact measures that accomplish enough of what is sought to make the exercise worthwhile without at the same time opening new avenues for avoidance. If that conclusion cannot be reached with confidence, there appear to be two choices: to abandon the exercise altogether, or instead to accept some type of highly engineered consolidation system that will likely prove costly and difficult to enact, implement, and administer.
Number of Pages in PDF File: 31
Keywords: corporate taxes, consolidation, tax reform
JEL Classification: K10, K30, K34, H25, G38Accepted Paper Series
Date posted: June 22, 2011
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