Taxation Is Brake On U.S. Investments Abroad

Chronicle (Levin), 29 December 1949, Page 5

Taxation Is Brake On U.S. Investments Abroad

SYDNEY, Dec. 28. The announcement by the new Minister of Supply and Development, Mr Casey, that a positive plan is being prepared by whicfi dollars will be s'ought and American investment in Australian enterprises encouraged, has met^ with general approval. American -industrialists and Australian businessmen have noted, .however, tliajt Mr Casey made no mention of possible steps to remove the double taxation barrier which exists at present between Australia and the United States. Though double taxation of English eompanies in Australia was removed five yesui's ago, all negotiations between the Ghifley Government and American authorlties for a similar agreement with the United States, broke down. U. The main stumbling block ap)pears to be t^hat though American inve|tors are already strongly committed- in* Austra|lia, practically no Australian eapital is invested in Anierica, Most taxing authorities claim that the eountry in whieh dividends are made, has the first right to tax and that on this basis the American Government should be first to eliminate its part of taxation on American income earned in Australia. The president of |he Association of American Manufacturers in Australia, Mr Eoy Miller, who believes the Men. zies Government will end double taxation, says that the present system is an insuperable bar to the encouragement of further United States investment in the Commonwealth. Mr Miller adds that though some American eompanies have substantial holdings in Australia, by the time both Governments tax the earnings, the American investor finds he would have earned approximately the same amounl if he had bought United States Government bonds. The Australian Government first taxes profits at 6s in the pound and i when the remaining 14s goes to Ameirica, it is taxed a further 6s in the I pound, leaving about 5s 6d or 28 pei ' cent of every pound earned in Austrar ' lia, to go to the American shareholder. American investors have already lost over the devaluation of the Australian pound but Mr Miller 's organisation is i endeavouring to induce American prin- ' cipals to add to their Australian eapital at the present. low exehange rate, m order to balance losses. The managing-director of Eveready (Australia) Proprietary Limited, Mr E. L. Brisbin, is convinced that only the removal of double taxation will bring American eapital here. He believes the recent ehange of Australian Government has helped to guarantee seeurity to the investor. According to an offieial of the Gommonwealth Government, American eompanies are permitted to send home all dividends earned* in Australia after the deduction of the tax and repatriate capi tal where a good reason exists. The Sydney Telegraph says; "Now the defeat- of the Labour Part}7 has removed some of the main feUrs of the American investor, the way should be clear "for a new approaeh to United States investmenL The opportunity is there for Mr Casey- to negotiate with the Americans and work out some compromise between two friendly goverfiment. "