02Asset 4

Company tax cuts – should Australia follow the US?

We have seen a lot of press lately about Company tax cuts. Donald Trump cut US tax rates late last year…so should Australia follow?

Will this make us more competitive on the global stage?

What benefits are there for small business, consumers and investors?

Whilst large businesses in Australia are still waiting for tax cuts, the government has already cut company tax rates for Small Business (down from 30% to 28.5% in FY16 and 27.5% in FY17).

Our Blog in May 2017 Company Tax rates are changing highlighted these rate changes. Most importantly the large corporate rate will only reduce gradually over the next eight years to 25%.

  • More jobs and wages through stimulating investments by companies in Australia
  • Encourage foreign investment by having lower tax rates
  • Why not join other countries like Japan and Germany, who recently cut corporate tax rates?
  • America’s corporate tax rate is actually 39.1% including all state taxes (higher than ours at 30%)
  • Real tax rates arent comparable due to differences in tax concessions eg depreciation, business writeoffs etc
  • Australia is around the middle of the field in international tax rates
  • Our imputation system means that Australian investors receive franking credits for company tax paid. A reduced corporate rax rate will mean reduced tax credits and in a lot of cases refunds for investors
  • Will investment be stimulated by this cut, as interest rates are already very low?
Debate continues… and here are a few articles worth reading
ABC News 21 December 2017
AFR 30 January 2018

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