When are investment tax breaks effective?

We investigate the effectiveness of seven business investment tax breaks under a range of different macroeconomic conditions using Australian tax and survey data over a 15-year period. Policies implemented during the 2009 Global Financial Crisis increased investment. Policies implemented during normal economic times mostly have no effect. Where present, responses are larger for unincorporated businesses, likely reflecting reduced efficacy of investment stimulus under Australia’s dividend imputation system. We find no evidence that policies enacted to address COVID-19 had any effect on investment, perhaps because of the unique nature of the economic shock.