The government is trying to get legislation through the Senate that would give company tax cuts to those companies with turnovers of $50 million or more. That legislation would eventually give company tax cuts to big business with turnovers of $1 billion or more.
The objective with Revenue Watch is to use the latest company profit results to estimate how much individual companies are likely to benefit from the tax cuts, assuming of course they were to be implemented. We do that using four main estimates:
- what the companies would have received had the cuts taken place in 2017-18,
- what they would receive in 2026-27 when the cuts are fully implemented,
- what they would receive in the decade starting with the year in which the unlegislated changes apply; 2019-20 to 2028-29,
- what they would receive in the decade beginning in the year the tax cuts are to be fully implemented: 2026-27 to 2035-36.
Estimate 1 just uses the present figures for tax payable in the financial results announced by the companies concerned. However, the other estimates involve taking those figures forward. The procedure here is to assume that the company’s profits and tax liabilities under present tax rates would grow at the same rate as the economy overall. In the past that has proven a reasonable assumption and is, if anything, biased on the conservative side. The assumed future growth in the economy is the same as the official assumptions outlined in the 2018-19 budget papers. The benefits of the tax cuts begin to apply to large companies in 2023-24 and are fully phased in by 2026-27. The rates for those years are used to estimate the benefits the companies can expect to receive.