Evaluation of Australian Corporate Tax Rate Reduction Impact

This report assesses the potential impacts of a reduction in the Australian corporate tax rate, examining its effects on Australian dividend imputation and taxpayers. It highlights the arguments for increased global competitiveness while also pointing out potential negative consequences for government revenue and social welfare programs. The analysis considers the influence of tax cuts in other countries, such as the United States, on the Australian context, and discusses the implications for different types of businesses operating within Australia, including multinational corporations and those focused on the domestic market. The report concludes that the reduction of corporate tax rates could be detrimental to the Australian government's financial capabilities, potentially affecting its ability to support its citizens and maintain existing standards of living. The report emphasizes that the current tax structure may only benefit multinational companies and that a reduction in corporate tax would reduce the government's ability to provide welfare benefits to its citizens.

Running head: ACCOUNTING AND FINANCE
Accounting and Finance
Name of the Student:
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Introduction:
The assessment aims in evaluating the impact of reduction in Australian corporate tax
rate could have on Australian dividend imputation and Australian tax payers. The relevant
significance of the reduction in Australiana corporate tax rate is adequately depicted, which
might allow the organisations to increase their competitiveness in the global market. The
limitations of the decisions are also highlighted, which might negatively affect operations of
the organisations.
The decline in corporate tax rate have both benefits and limitations, which can affect
the revenue generation capability of the Australian government. The question of reducing the
Austrian tax rate was mainly instigated after the reduction in their tax rate made by the
Donald Trump Administration in US. This reduction in the current tax rate, which has been
implemented by major countries all around the world directly highlighted the question where
the Australian organisation are able to compete in global market. Moreover, seeing the
changes conducted by major developed countries Australian authorities have decided to
reduce the corporate tax rate to the levels of 25%. The decision has not been made as it is
been argued by the Australian authorities whether to reduce the corporate tax rate
(Abc.net.au, 2017).
However, the reduction in corporate tax rate would only benefit the current
organisation, which has been operating in Australia. In addition, the economy is mainly based
on mining industries, which is located within the country and produce the largest revenue as
tax to the Australian government. Hence, reduction in the taxes would directly result in the
decline in its revenue collection, which will affect government capability to support its other
financial obligations. Hence, the reduction in corporate tax rate would negatively affect tax
revenue of the government and hamper the care, which is given by the Australian government

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to its citizens. There are some companies who operate in Australia but the entire revenue is
transferred offshores such as BHP Billiton. Therefore, reduction in the current corporate tax
will not benefit the Australian citizens (Abc.net.au, 2017).
The tax deduction can have an impact on the Australian dividend imputation and
Australian tax payers. However, the issue is regarding the high tax rate which is imposed on
medium and small organisations operating in Australia. Hence, the authorities need to curb
the taxes on such organisations, as it decreases their capability to grow in the competitive
market. However, only the foreign investor needs low corporate taxes, while the Australian
investor are benefiting from the franked divined system. On the other hand, the foreign
investors do not invest in accordance with the corporate tax rate but the fiscal and monetary
decisions, which are made by the country. Hence, the decision for not increasing the
corporate tax rate would be beneficial for the Australian citizens and the government
(Theconversation.com, 2015).
The current corporate tax is reducing the competitiveness of their organisations, while
the investors look for economic and political stability, as they conducting their investment,
which directly improves Australian equites position in the global market (Ato.gov.au, 2018).
In addition, the reduction in corporate tax rate would directly impact on benefits and welfare,
which is been provided by the government to each citizen. Hence, it will reduce the standard
of living and further demise the benefits, which can be provided to the citizens.
Conclusion:
Therefore, from the evaluation it could be detected that reduction in the corporate tax
rate is a bad idea, as it will have negative impact on revenues of the government and hamper
their capability to support welfare expenses. Moreover, tax cut will only benefit the

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multinational companies, while normal citizens will be at loss. Hence, the Australian tax rate
needs to be same for big organisations.

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References:
Abc.net.au. (2017). ABC News. Retrieved 26 August 2018, from
http://www.abc.net.au/news/2017-11-01/jury-out-on-the-merits-of-a-company-tax-
cut/9106350
Abc.net.au. (2017). ABC News. Retrieved 26 August 2018, from
http://www.abc.net.au/news/2017-10-13/fact-check-wii-australia-be-uncompetitive-
on-company-tax/9033940
Ato.gov.au. (2018). Ato.gov.au. Retrieved 26 August 2018, from
https://www.ato.gov.au/Rates/Company-tax/
Theconversation.com. (2015). The Conversation. Retrieved 26 August 2018, from
https://theconversation.com/factcheck-is-australias-corporate-tax-rate-not-
competitive-with-the-rest-of-the-region-37226