Tax implications arising from mergers and acquisitions - an investigation of Australian firms

The tax and accounting literature indicates that mergers and acquisitions (M&As) have not been predominant in Australia until recently, but there is strong overseas evidence that suggests that this course of action can have significant tax implications. This paper investigates the presence, if any, of potential tax advantages obtained by Australian-based firms through M&A deals. Ninety-seven observations, comprising M&A deals completed between 2005 and 2015, were investigated to statistically support and explain the potential link between M&A decisions and certain corporate tax advantages gained. The findings suggest that when firms make profit-maximising decisions as part of an M&A deal, a potential reduction in tax can transpire from such transactions.