Australia's Company Tax: Options for Fiscally Sustainable Reform

39 Pages Posted: 10 May 2018

See all articles by David Ingles

David Ingles

Australian National University (ANU) - Crawford School of Public Policy - Tax and Transfer Policy Institute

Miranda Stewart

University of Melbourne - Law School; Australian National University (ANU) - Crawford School of Public Policy

Date Written: October 24, 2017

Abstract

The Australian Government proposes to reduce the company tax rate from 30 to 25%. However, there are widespread concerns that the fiscal cost is not affordable. This article considers alternative reforms of corporate taxation that could fund a corporate tax rate cut, while addressing key non‑neutralities in the corporate tax system in an international context. The authors examine the case for abolition of dividend imputation in favour of a lower headline company tax rate and consider the spectrum of reform options for the corporate tax base, which ranges from the cash flow tax and allowance for corporate equity or capital to a comprehensive business income tax which would eliminate interest deductibility. These measures (which could co‑exist in a hybrid system) might be accompanied by discounts on dividend and interest income at the personal level, in replacement of dividend imputation.

Keywords: allowance for corporate capital; allowance for corporate equity; cash flow tax; comprehensive business income tax; corporation tax; dividend imputation; rent tax; tax policy

Suggested Citation

Ingles, David and Stewart, Miranda, Australia's Company Tax: Options for Fiscally Sustainable Reform (October 24, 2017). Australian Tax Forum, Vol. 33(1), 2018, Available at SSRN: https://ssrn.com/abstract=3168953

David Ingles

Australian National University (ANU) - Crawford School of Public Policy - Tax and Transfer Policy Institute ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

Miranda Stewart (Contact Author)

University of Melbourne - Law School ( email )

Melbourne, Victoria 3010
Australia
+61 3 8344 6544 (Phone)

Australian National University (ANU) - Crawford School of Public Policy ( email )

7 Liversidge Street
Lennox Crossing
Canberra, ACT 0200
Australia

HOME PAGE: http://https://crawford.anu.edu.au/people/academic/miranda-stewart

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