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The Australian dividend imputation system and corporate tax avoidance
Published on 01 Jul 19 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
This study investigates whether and how the Australian dividend imputation system alleviates corporate tax avoidance by Australian listed companies. Based on a sample of profitable Australian listed companies across the period from 2009 to 2012, this study finds that companies distributing a higher proportion of their after‑tax profits as franked dividends and companies with less foreign ownership engage in less corporate tax avoidance. No significant statistical association between foreign operations and corporate tax avoidance is found. Furthermore, this study finds that when an Australian listed company with partial foreign ownership pays more franked dividends to meet the demands of its Australian shareholders, it tends to engage in less corporate tax avoidance; and when an Australian company has foreign operations, it may shift foreign profits to Australia to enjoy greater benefits from the imputation system. This study contributes to the literature and political debate with regards to corporate tax avoidance by providing empirical evidence on the tax avoidance‑reducing effect of the dividend imputation system.
Author profiles
Estelle Xuerui Li
Estelle completed her doctoral degree from The Australian National University in 2018.
Dr Alfred Tran
Alfred is a Honorary Associate Professor, Research School of Accounting, The Australian National University. - Current at 17 April 2020
The Tax Institute is Australia's leading professional association and educator in tax providing the best resources, professional development and networks.