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Fact sheet

Fact Check: Would companies that paid no tax in 2015-16 be unable to benefit from a tax cut so as to invest more and help lift wages?

Australian Labor Party Company tax Tax cuts Wages

Ten companies signed a letter written by the Business Council of Australia in which they promised to invest more in Australia should the Turnbull Government's proposed corporate tax cut be passed. But Labor senator Murray Watt said half of those companies did not pay company tax in 2015-15, and would therefore not be in a position to pass on the benefits of a tax cut through higher wages. But Senator Watt's is on shaky ground. As experts noted, using a single year (in this case, 2015-16) to make a broad assertion about the future is problematic. Should the legislation be passed, the tax cut would not apply until the next decade for some larger companies. In their letter, the companies left open the timing of future wage increases resulting from the tax cut, promising stronger wages growth "as the tax cut takes effect". As experts pointed out, whether a company pays corporate tax in a given year depends on a range of factors, including market conditions, past capital investments and tax offsets. Not paying company tax in a particular year does not mean a business will not pay company tax in the future. Indeed, some of the signatory companies that did not pay corporate tax in 2015-16 have indicated they are on track to pay corporate tax in the near future.

Verdict: Shaky Ground

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