Is there empirical evidence of industry superannuation funds adopting aggressive tax strategies?
Source: Australian Tax Forum Journal Article
Published Date: 1 Dec 2021
The objective of this paper is to evaluate empirically whether industry superannuation funds adopt aggressive tax strategies to minimise the incidence of taxation. Notwithstanding anecdotes of funds adopting aggressive tax strategies, we find no empirical evidence of this. Further, while there is variation in tax rates across funds, there is no evidence that this is associated with factors linked with the adoption of aggressive tax strategies. These findings are significant as contexts with low tax rates are given scant consideration in the extant literature and it suggests that with tax rates below 10% the benefits of tax aggressiveness (i.e., the excess of benefits over costs) are limited. This is relevant to the literature considering the incentives for tax aggressiveness generally. We also take advantage of this context to evaluate the appropriateness of alternate measures of corporate tax avoidance. Of particular concern is the cash effective tax rate, and we identify issues with this measure where there is growth and/or variability in income, with this resulting in biased measures of tax aggressiveness.
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Details
- Published By: Peter Wells, Thulaisi Sivapalan, Brett Govendir, Roman Lanis
- Published On:1 Dec 2021
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