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Australia’s company tax: Options for fiscally sustainable reform

Published on 01 Apr 18 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE

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.

Author profiles

Prof Miranda Stewart CTA
Miranda is a leading international expert on tax law and policy, and Director of the Tax and Transfer Policy Institute at Crawford School, Australian National University (ANU) in Canberra. Professor Stewart has more than 20 years experience working at the leading edge of policy research, design and development. She joined ANU from the University of Melbourne, where she was a Director of Tax Studies for many years. She has previously worked at New York University School of Law in the United States, in major Australian law firms advising business on tax law, and at the ATO advising on business tax law and policy, and has consulted for government on various tax and transfer policy issues. - Current at 30 June 2015
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David Ingles
David is a Senior Research Fellow, Tax and Transfer Policy Institute, Crawford School of Public Policy, ANU.
Current at 1 April 2018

 

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