Question
In Australia, the tax on dividends and capital gains is15%, the corporate tax rate is 30% and the individual tax on interestpayments is 50%. 1.
In Australia, the tax on dividends and capital gains is15%, the corporate tax rate is 30% and the individual tax on interestpayments is 50%.
1.
A) Considering personal and corporate taxes, does debt has a nettax advantage in Australia? Assuming that other than tax thereare no advantages or disadvantages of debt, what is the optimalleverage ratio (0% to 100%) for companies in Australia?
B)Suppose the new government plans to increase the tax on divi-dends from 15% to 30%? Should the amount of leverage used byAustralian companies increase or decrease? What is the optimalleverage ratio under new tax regime?
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A Under the current tax regime 1 030 interest expense 050 interest income Simplifying the equation 0...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
