The Determinants of Corporate Effective Tax Rates: Evidence from Australia

Melbourne Institute Working Paper No. 21/99

Date: September 1999

Author(s):

Mark N. Harris
Simon Feeny

Abstract

The Effective Tax Rate (ETR) paid by firms can differ from the statutory rate due to the usage of tax shields and applicable credits and rebates. This paper attempts to investigate the characteristics of large Australian firms which drive ETR's away from the standard rate of corporation tax. There is evedence to suggest that interest payments, R&D expenditure, foreign ownership, stock-market listing, and the number of subsidiaries, all have a significant effect on ETR's. The result also suggest that unobserved firm heterogeneity plays a significant role.

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