Australia to Eliminated Corporate Tax

December 6, 2011 Taxation in Australia

Corporate tax AustraliaCANBERRA – Australia is mulling a radical new overhaul to the corporate tax system, whereby many companies would see no income tax liability at all.

While giving a presentation at a tax conference held at the University of Canberra on December 5th, Rob Heferen announced that the Treasurer of Australia had established a new working group to investigate and formulate plans for a potential overhaul to the corporate tax system.

The group is looking into the feasibility of a new system under which corporate tax rates would be removed for all business operating in Australia, and replaced with a new levy which would be charged on the profits of any business that reaches a pre-set return on equity level. Rob Heferen, who was appointed as head of the Treasury’s working group, said that the exact return on equity rate had not yet been decided upon, but suggested that the new levy would only be applicable to very large businesses like mining operations, banks and other large scale businesses. It was suggested that the tax rate for companies that are subject to the proposed system could be as high as 50 percent of marginal earnings.

Rob Heferen’s revealed that the Australian Council of Trade Unions and the Business Council of Australia have already discussed the overhaul with the working group, and are in support of the new proposed system.

The working group is currently evaluating the overall costs that would be associated with switching to the new system. The final report on the tax overhaul is scheduled to be presented to the Treasurer of Australia Wayne Swan by December 2012.

Photo by Necromundo