Geared equity investments : a case study of tax arbitrage down under

Corrado, Charles J. and Cheung, Joe 2003, Geared equity investments : a case study of tax arbitrage down under, Australian journal of management, vol. 28, no. 1, pp. 83-96.

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Title Geared equity investments : a case study of tax arbitrage down under
Author(s) Corrado, Charles J.
Cheung, Joe
Journal name Australian journal of management
Volume number 28
Issue number 1
Start page 83
End page 96
Total pages 14
Publisher Sage
Place of publication London, England
Publication date 2003-06
ISSN 0312-8962
Summary Geared Equity Investment (GEI) contracts are an over-the-counter financial derivative product offered by Macquarie Bank, Ltd. to individual investors in Australia and New Zealand as a managed-risk investment in local shares carrying significant tax shield benefits. Upon issuance, a geared equity contract has three stakeholders: (1) the investor; (2) the issuer; and (3) the national tax authority. We assess the value of these contracts to each stakeholder and their support for tax arbitrage. We find that the national tax authority provides a significant subsidy to GEI contracts via tax shield benefits. These benefits support investor tax arbitrage in certain cases and issuer tax arbitrage in all cases examined.
Language eng
Field of Research 150203 Financial Institutions (incl Banking)
HERDC Research category C1.1 Refereed article in a scholarly journal
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Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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