This study investigates the tax performance of foreign-controlled companies In Australia as compared to domestic-owned companies. This topic is of particular interest to the Australian Tax Authority as there is currently no empirical study on this topic available in Australia. With the foreign ownership level in Australia continually rising, the effect of foreign ownership on the Australian economy is a topical issue both in the political and public arenas.
Using a transfer pricing framework provided by research in foreign controlled domestic corporations, hypotheses are developed about the tax performance of these companies and their level of income shifting activity.
While results are mixed, there is support for the low tax performance of foreign-controlled companies in Australia. Further evidence, though not consistent, is found on the level of income shifting activity of the foreign-controlled companies operating in Australia as measured by the relative volume of related party international transactions.
Apart from examining a relatively new area of research in Australia, the other major aim of this thesis is to continue the development and testing of new case selection technique used by in the Australian Taxation Office's Transfer Pricing Record Review Program.
While finding some support for various hypotheses, caution is required in placing reliance on these results.