UTS report reveals $2.18bn a year of government’s $48bn tax cut will flow offshore to shareholders of multinational corporations and foreign tax authorities

This article is more than 4 years old

This article is more than 4 years old

More than 40% of the benefit of the Coalition government’s $48bn company tax cut will go offshore to shareholders of multinational corporations and foreign tax authorities, a new report has found.

The report by academics at the University of Technology Sydney, commissioned by GetUp, reviewed 250 of the largest payers of company tax in 2013-14.

It found cutting the corporate tax rate to 25% would result in $2.18bn a year flowing offshore in dividends to overseas-based investors. That represents 40% of the total cost of the $48bn tax cut over 10 years.

Coalition's company tax cuts would hand $1bn a year to US – thinktank Read more

Australian shareholders will get $2.87bn, 52% of the total tax benefit. The beneficiaries of the remaining 8% cannot be determined.

The report noted that due to Australia’s system of dividend imputation, domestic shareholders only pay the difference between the corporate tax rate and their own marginal tax rate for income earned on share dividends.

“This means the income tax of Australian shareholders will rise proportionate to any benefit received from the corporate tax cut,” it said.

The top 20 companies accounted for $4.11bn of the tax benefit, almost 75% of the total.

Of the top 20 beneficiaries, seven are mining and energy corporations which will receive a $1.56bn windfall, of which 63% would flow offshore.

Two of the top 20 are tobacco companies who will receive a total of $88.5m – all of which will flow offshore.

Corporations operating in the finance and materials sectors are the biggest beneficiaries, receiving 38% and 30% respectively.

GetUp national director, Paul Oosting, said the report showed “the government’s big economic plan is not much of a plan at all – sending billions of dollars offshore, boosting the profits of foreign multinationals”.

“Prime minister Malcolm Turnbull insists that his $48bn tax cut will trickle down to supercharge the economy, but you don’t create jobs or boost growth by lining the pockets of foreign investors.

“It certainly raises the question of who Mr Turnbull is managing the economy for – everyday Australians or the big end of town,” Oosting said.



The report follows an analysis by the Australia Institute which found cutting the corporate tax rate to 25% will deliver a $999m-a-year windfall to the US Internal Revenue Service when fully implemented.

Grattan Institute director John Daley has said that government claims the tax cut will deliver a 1.2% boost to GDP over 20 years was overstated because the real benefits – in the form of income – will flow disproportionately to foreign corporations.

Malcolm Turnbull says Grattan Institute 'wrong' about company tax cuts Read more

Daley said Treasury’s modelling shows Australia’s income will only increase by 0.8%.

Asked to explain his support for the company tax cut on ABC’s Q&A on 20 June, Turnbull said it would result in more investment and jobs.

“The Treasury found last year that for every dollar cut in company tax, you got $4 of benefit of growth into the economy, into GDP of which between two-thirds and three-quarters went to labour, went to workers,” he said.

Turnbull said the economy was not like a cake of fixed size but rather was dynamic.

“You need to ensure that government is doing everything it can to make for more investment, more employment and therefore a stronger economy, leads to more tax revenues,” he said.