Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The Role of Political Costs in the Deferred Tax Policy Choice

The Role of Political Costs in the Deferred Tax Policy Choice This paper demonstrates that (time- and context-specific) ‘political costs' were instrumental in the entry of deferred tax accounting into Australian GAAP in the early 1970's—a period in which high profits and low corporate taxes coincided in a volatile political mix. Politically exposed companies (of large size, with low effective tax rates, particularly in the mining industry) with the ability to reduce their exposure through deferred tax accounting (if it was tax-expense increasing), adopted the method. Companies for whom adoption would be tax-expense reducing, either deferred adoption to a less politically sensitive period or adopted with the average impact being such as to not lower their reported tax rate below that of the average rate of non-adopters. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Australian Journal of Management SAGE

The Role of Political Costs in the Deferred Tax Policy Choice

Download PDF
20 pages

Loading next page...
 
/lp/sage/the-role-of-political-costs-in-the-deferred-tax-policy-choice-DbLL4w4qSE
Publisher
SAGE
Copyright
Copyright © by SAGE Publications
ISSN
0312-8962
eISSN
1327-2020
DOI
10.1177/031289620302800103
Publisher site
See Article on Publisher Site

Abstract

This paper demonstrates that (time- and context-specific) ‘political costs' were instrumental in the entry of deferred tax accounting into Australian GAAP in the early 1970's—a period in which high profits and low corporate taxes coincided in a volatile political mix. Politically exposed companies (of large size, with low effective tax rates, particularly in the mining industry) with the ability to reduce their exposure through deferred tax accounting (if it was tax-expense increasing), adopted the method. Companies for whom adoption would be tax-expense reducing, either deferred adoption to a less politically sensitive period or adopted with the average impact being such as to not lower their reported tax rate below that of the average rate of non-adopters.

Journal

Australian Journal of Management – SAGE

Published: Jun 1, 2003

There are no references for this article.