Company Taxation in Australia

Abstract

N the years since World War II Australia has been faced with a chronic deficit in its balance-of-payments current account. This situation has come about as a result of Australia's dependence on wool and a few other exports as a source of overseas earnings coupled with substantial unsatisfied demand on the part of her people for goods produced overseas.' Downward fluctuations in wool prices have usually caused a loss of foreign exchange with a consequent decrease in national purchasing power and a contraction in the supply of money. Whenever the depletion of reserves has reached a danger point, the Commonwealth government has severely restricted imports. The restrictions are relaxed only on an improved showing in the proceeds from exports and a rise in the level of foreign exchange reserves. In recent years many leading Australian economists have become convinced that the deficit in the balance of payments on current account is a matter of indefinite duration since present prospects for substantially increasing exports are not good. Efforts being made by Commonwealth authorities to remedy the situation include the promotion of exports, endeavours to maintain currency stability, promotion of economic development, encouragement of efficient domestic production, maintenance of the climate for foreign investment, and quantitative restriction of imports as an interim measure to conserve foreign exchange for essential imports. Among officials of the Commonwealth government, the opinion is developing that it would be desirable to pursue a policy of more actively seeking prospective investors abroad and inducing them to invest in Australia. Such a policy has the following advantages: it would give much greater stability to the level of capital inflow, which is of key importance to the balance of payments; and it would enable investment to be channelled into areas where gaps in production now exist. Present economic circumstances favour such a policy but the Commonwealth government has been slow to implement it. None the less, investors from the United States and the British Commonwealth have shown ever increasing interest in Australia. Moreover, when once established in Australia overseas investors have received the enthusiastic support of both state and Commonwealth governments. Clearly, the future prospects for investment in Australia are good. Australian manufacturing enterprises enjoy the advantage of geographical proxim-