Winning the Away Game: Australia-based Global Companies and the Economy is the latest report in the ANZ insight series and examines the role Australia-based global companies play in the economy and suggests tax reform is needed for Australians to benefit as they diversify and grow.
• Australian outward direct investment as a proportion of GDP compared to the OECD average has fallen steadily over the last decade. In the decade to 2004, it was 126 per cent of the OECD average, falling steadily since then to reach 68 per cent in 2013.
• Australian investors face a 30% higher rate of tax on dividends sourced from foreign profits than on dividends from domestic profits. Therefore, dividends from foreign assets are more valuable to offshore investors than to Australians.
• Tax reform will help increase Australian investment in offshore businesses and generate significant economic benefits. Based on experience in other jurisdictions, economic benefits would likely be realised in around two years from the reform’s introduction.
• The recommended non-refundable foreign tax credit of 20% would generate a net economic benefit of more than AU$1bn per year over and above costs to revenue of around AU$1.75bn. An additional AU$300bn of foreign assets would be owned by Australians.