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Business, 13.12.2019 17:31 stalley1521

In australia, the tax on dividends and capital gains is 15%, the corporate tax rate is 30% and the individual tax on interest payments is 50%.

(a) considering personal and corporate taxes, does debt has a net tax advantage in australia? assuming that other than tax there are no advantages or disadvantages of debt, what is the optimal leverage ratio (0% to 100%) for companies in australia?
(b) suppose the new government plans to increase the tax on dividends from 15% to 30%? should the amount of leverage used by australian companies increase or decrease? what is the optimal leverage ratio under new tax regime?

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In australia, the tax on dividends and capital gains is 15%, the corporate tax rate is 30% and the i...
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