TTPI Working Paper 9/2018

Australia’s high company tax rate and dividend imputation: a poor recipe for a small open economy?

by Chris Murphy, Arndt-Corden Department of Economics & Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National University.


By international standards, Australia’s business tax system combines a high company tax rate of 30 per cent with low taxation of domestic investors through dividend imputation. This prioritising of domestic investors over foreign investors is at odds with the evidence in this paper that the marginal investor is foreign. Better aligning Australia’s business tax system with international practice would encourage business investment, reduce tax avoidance and reduce the riskiness of national income. This paper assesses the evidence on the size of these three effects and models the consumer benefits of better aligning the Australian business tax system with international practice.

The working paper is available here.


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