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The Ralph Report Depreciation Proposals and Investment Neutrality

Benge, Matt

Description

The Review of Business Taxation chaired by Mr John Ralph has suggested sweeping changes to business taxation in Australia. In particular it has been proposed that accelerated depreciation provisions be removed to finance a reduction in the company tax rate. If some degree of accelerated depreciation is to be retained, it is suggested that this should involve a uniform loading on depreciation rates for all assets. The aim is to provide a more uniform treatment of assets with different economic...[Show more]

dc.contributor.authorBenge, Matt
dc.date.accessioned2002-04-29
dc.date.accessioned2004-05-19T09:22:26Z
dc.date.accessioned2011-01-05T08:43:01Z
dc.date.available2004-05-19T09:22:26Z
dc.date.available2011-01-05T08:43:01Z
dc.date.created1999
dc.identifier.urihttp://hdl.handle.net/1885/40485
dc.identifier.urihttp://digitalcollections.anu.edu.au/handle/1885/40485
dc.description.abstractThe Review of Business Taxation chaired by Mr John Ralph has suggested sweeping changes to business taxation in Australia. In particular it has been proposed that accelerated depreciation provisions be removed to finance a reduction in the company tax rate. If some degree of accelerated depreciation is to be retained, it is suggested that this should involve a uniform loading on depreciation rates for all assets. The aim is to provide a more uniform treatment of assets with different economic lives. This paper examines the neutrality of these proposals for unincorporated enterprises and companies owned by Australian shareholders. It is shown that with positive inflation, the proposal to remove accelerated depreciation altogether would provide a bias favouring longer-lived assets. In the absence of inflation a system of uniform loadings would provide a bias favouring shorter-lived assets although at very low rates of inflation, this bias can be reversed. The biases created by a system of non-accelerated depreciation or a system of uniform loadings would, however, be small relative to those created by current depreciation provisions.
dc.format.extent79859 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoen_AU
dc.subjectAccelerated Depreciation
dc.subjectInvestment Incentives
dc.subjectBusiness Taxation.
dc.titleThe Ralph Report Depreciation Proposals and Investment Neutrality
dc.typeWorking/Technical Paper
local.description.refereedno
local.identifier.citationmonthmay
local.identifier.citationyear1999
local.identifier.eprintid280
local.rights.ispublishedyes
dc.date.issued1999
local.contributor.affiliationSchool of Economics
local.contributor.affiliationANU
local.citationWorking Papers on Economics and Econometrics, No.371
CollectionsANU Research Publications

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