The effectiveness of the regulatory response to corporate tax aggressiveness in Australia

McClure, Ross William

The effectiveness of the regulatory response to corporate tax aggressiveness in Australia

McClure, Ross William

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Publication Type:: Thesis
Issue Date:: 2018

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Field	Value	Language
dc.contributor.author	McClure, Ross William
dc.date.accessioned	2019-01-11T00:18:36Z
dc.date.available	2019-01-11T00:18:36Z
dc.date.issued	2018
dc.identifier.uri	http://hdl.handle.net/10453/129455
dc.description	University of Technology Sydney. Faculty of Business.	en_AU
dc.description.abstract	The objective of this thesis is to assess the effectiveness of dividend imputation in reducing corporate tax aggressiveness in Australia. An evaluation of the impact of divergent incentives for tax avoidance across a pooled, cross-section of firms reveals significant differences between firms that pay dividends with tax credits attached, as opposed to those that do not pay dividends or pay dividends without tax credits. Results suggest that firms paying dividends with tax credits are less likely to engage in tax avoidance, having an average cash effective tax rate up to 16.9 percentage points higher than firms that pay dividends without tax credits, and up to 14.7 percentage points higher than firms that do not pay dividends at all. Despite these results, there is still wide variation in the level tax avoidance amongst those firms paying dividends with tax credits, even though they face similar incentives that theoretically, should discourage corporate tax avoidance. This thesis finds economically and statistically significant evidence that firms in this group set target tax rates, based on their planned dividend payouts, in order to maximize tax credits available to shareholders. Further, a positive association exists between outside directors and corporate tax avoidance, even in instances where firms are utilising dividend imputation which is expected to mitigate such an association. In combination, these results suggest there is heterogeneity of the costs and benefits of tax avoidance which creates a challenge in evaluating corporate tax aggressiveness generally, and the impact of corporate governance on corporate tax avoidance in particular. Overall, these results provide insights into the effectiveness of dividend imputation in mitigating corporate tax avoidance, as well as providing theoretical and empirical support for the continuance of dividend imputation in Australia.	en_AU
dc.format	Thesis (PhD)
dc.language.iso	en_AU	en_AU
dc.relation	https://opus.lib.uts.edu.au/bitstream/10453/129455/2/02whole.pdf
dc.rights	The author owns the copyright in this thesis including all reproduction and reuse rights for the work. The work may not be altered without the permission of the copyright owner. Attribution is essential when quoting or paraphrasing from this thesis.
dc.rights	au.edu.uts.lib/ppc
dc.rights	info:eu-repo/semantics/openAccess
dc.subject	Tax aggressiveness.
dc.subject	Australia.
dc.subject	Tax credit.
dc.subject	Dividend.
dc.subject	Shareholder.
dc.subject	Corporate governance.
dc.title	The effectiveness of the regulatory response to corporate tax aggressiveness in Australia	en_AU
dc.type	Thesis	en_AU
utslib.copyright.status	open_access

Abstract:

The objective of this thesis is to assess the effectiveness of dividend imputation in reducing corporate tax aggressiveness in Australia. An evaluation of the impact of divergent incentives for tax avoidance across a pooled, cross-section of firms reveals significant differences between firms that pay dividends with tax credits attached, as opposed to those that do not pay dividends or pay dividends without tax credits. Results suggest that firms paying dividends with tax credits are less likely to engage in tax avoidance, having an average cash effective tax rate up to 16.9 percentage points higher than firms that pay dividends without tax credits, and up to 14.7 percentage points higher than firms that do not pay dividends at all. Despite these results, there is still wide variation in the level tax avoidance amongst those firms paying dividends with tax credits, even though they face similar incentives that theoretically, should discourage corporate tax avoidance. This thesis finds economically and statistically significant evidence that firms in this group set target tax rates, based on their planned dividend payouts, in order to maximize tax credits available to shareholders. Further, a positive association exists between outside directors and corporate tax avoidance, even in instances where firms are utilising dividend imputation which is expected to mitigate such an association. In combination, these results suggest there is heterogeneity of the costs and benefits of tax avoidance which creates a challenge in evaluating corporate tax aggressiveness generally, and the impact of corporate governance on corporate tax avoidance in particular. Overall, these results provide insights into the effectiveness of dividend imputation in mitigating corporate tax avoidance, as well as providing theoretical and empirical support for the continuance of dividend imputation in Australia.

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http://hdl.handle.net/10453/129455