Finance Assignment: Corporate Tax Cut Analysis in Australia

This assignment provides an analysis of the Australian government's corporate tax cut, examining its potential benefits and drawbacks for Australian taxpayers. It discusses the impact on corporate retention, investor returns, employment, and living standards. While the tax cut could boost the economy and benefit multinational companies, it may also reduce government revenue for essential services. The analysis suggests focusing on supporting small and medium-scale industries instead. Furthermore, the assignment includes a stock analysis of BHP and NAB, recommending portfolio investment as a viable approach to generate higher returns with reduced risk compared to individual stock selection, leveraging financial data from 2016.

Running head: FINANCE
Finance
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Q3: Understanding the obstacles and privileged that could be generated by the corporate tax
cut conducted by the Australian government.............................................................................2
Question 4:.................................................................................................................................4
Answer to i:................................................................................................................................4
Answer to ii:...............................................................................................................................5
Answer to iii:..............................................................................................................................5
Answer to iv:..............................................................................................................................5
Answer to v:...............................................................................................................................6
Answer to vi:..............................................................................................................................6
Answer to vii:.............................................................................................................................6
Answer to viii:............................................................................................................................7
Answer to ix:..............................................................................................................................7
References:.................................................................................................................................8

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Q3: Understanding the obstacles and privileged that could be generated by the
corporate tax cut conducted by the Australian government
The decision made by the Australian government regarding corporate tax cut has
relevant privileges and obstacles for the Australian taxpayers. the overall evaluation of the
situation can eventually help in detecting the benefits or the problems that could arise after
the implementation of Corporate tax cut. there are certain benefits that could be generated
from the overall decision by the Australian government. the first and foremost impact will be
on the retention capacity of Corporate operating in Australia, which would eventually
increase their capacity to invest in the country. Moreover, the corporate tax cut would also
help the investors way dividend imputation credits will be substantially reduced by the
company when transferring it to the investors. this would eventually increase the return
generation capacity of the investors, while maintaining the same risk level. You are the
benefits that could be generated increment in employment, high wage rate, improvement in
living standards and increase in foreign direct investment. the above-mentioned benefits
would eventually allow the Australian government to collect higher tax from the corporate as
well as individuals, which would eventually increase their GDP. This improvement and
potential could be provided to investors, which might generate higher returns from
investment (Theguardian.com, 2018).
The economic condition of Australia would eventually boost after the implementation
of corporate tax rate, which would eventually help small and medium scale industries to
survive in the competitive market. moreover, the multinational companies would eventually
get benefits from reduction in tax cut which would eventually help them increase their
investing activities in Australia. Australia is considered to be one of the mineral rich
countries, while decreasing the corporate tax rate would eventually boost the economic

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condition of mining companies. However, there is relevant disadvantages to the
implementation of Corporate tax cut, which could directly impact the Australian citizens
(Theguardian.com, 2018).
The Australian government relatively provides Medical and school care for their
citizens, which is funded by taxes that is accumulated by the government. any decrease in the
overall collection of tax would eventually impact the services that could be provided by the
government. this would eventually hamper the living standard of Australian citizens. Many
analysts directly indicate that the decision regarding corporate tax cut would directly affect
the government's capability to conduct capital expenditure in future. moreover, the address
also stated that the overall progress of boost in the economy is for short duration, after which
the benefits would only be provided to corporate and big firms. furthermore, the arguments
provided by and list of other fueled by the overall increasing profitability that is generated by
multinational corporations in Australia. There are many companies situated in Australia,
whose overall net income is transferred overseas to the actual origin of the organization.
According to Theguardian.com (2018), the benefits that was estimated to provide Australian
citizens with jobs and living standard is only helping high class individuals.
Therefore, there is a possibility where declining tax revenue would directly affect the
capability of the Australian government to conduct its operations. Hence, the corporate tax
cut should be ignored by the Australian government, as it will only benefit big organizations
and corporate, corporates, while the actual individuals would suffer from the tax deduction.
However, certainly measures should be taken by the government for the small and medium
scale industries, which are getting hampered from government restrictions and competition.
Henceforth, the Australian government needs to tic adequate measures, where the overall
benefits can be transferred to medium and small-scale industries, which eventually support
the GDP of the country. Ignorance of reduction in corporate tax rate and supporting small

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industries would eventually allow the Australian government to improve the economic
conditions and reduce the negative impact from global market (Theguardian.com, 2018).
Question 4:
Answer to i:
1/1/2016
2/1/2016
3/1/2016
4/1/2016
5/1/2016
6/1/2016
7/1/2016
8/1/2016
9/1/2016
10/1/2016
11/1/2016
12/1/2016
0.5%
6.5%
22.8%
-7.0%
0.6%
2.6% 4.2%
12.5%
2.0%
6.5%
-1.8%
6.3%
BHP Return
1/1/2016
2/1/2016
3/1/2016
4/1/2016
5/1/2016
6/1/2016
7/1/2016
8/1/2016
9/1/2016
10/1/2016
11/1/2016
12/1/2016
-10.2%
8.5%
3.6%
-0.1%
-6.3%
4.4%
3.0% 1.9%
0.5%
3.3% 2.7% 2.1%
NAB Return

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1/1/2016
2/1/2016
3/1/2016
4/1/2016
5/1/2016
6/1/2016
7/1/2016
8/1/2016
9/1/2016
10/1/2016
11/1/2016
12/1/2016
-5.4%
-2.1%
4.1%
3.2% 2.5%
-2.5%
6.3%
-2.0%
-0.1%
-2.2%
1.9%
3.9%
AORD Return
Answer to ii:
Answer to iii:
Answer to iv:

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Answer to v:
4.5000% 5.0000% 5.5000% 6.0000% 6.5000% 7.0000% 7.5000% 8.0000%
0.0000%
10.0000%
20.0000%
30.0000%
40.0000%
50.0000%
60.0000%
70.0000%
80.0000%
NAB and BHP (Risk & return)
NAB BHP
Answer to vi:
Answer to vii:
0 0.2 0.4 0.6 0.8 1 1.2 1.4
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Security Market Line (SML)

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Answer to viii:
Answer to ix:
The investments in portfolio is a viable approach, which would eventually allow
investors to generate higher returns from investment, as the risk is relatively lower than 1.
Therefore, with the use of portfolio investment in both BHP Billiton and National Australia
Bank Limited can be conducted, which might help in generating higher returns from
investment. On the other hand, the selection of a particular stock would eventually increase
disk with the accommodation of returns from investment. Hence, investing in portfolio is a
viable approach which would eventually reduce the risk from investment.

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References:
Au.finance.yahoo.com. (2018). Au.finance.yahoo.com. Retrieved 9 April 2018, from
https://au.finance.yahoo.com/quote/BHP.AX/history?
period1=1451586600&period2=1485801000&interval=1mo&filter=history&frequenc
y=1mo
Theguardian.com. (2018). Labor's left faction digs in against Turnbull's corporate tax
cuts. the Guardian. Retrieved 9 April 2018, from
https://www.theguardian.com/australia-news/2018/feb/26/labors-left-faction-digs-in-
against-turnbulls-corporate-tax-cuts