Australian Tax Forum
Australian Tax Forum is a prestigious quarterly journal with the objective of providing discussion on issues in tax policy, law and reform amongst tax professionals. It is an essential reference source for understanding and contributing to the development of taxation systems worldwide. Australian Tax Forum is aimed at those who want to influence the future development of tax policy. It is an important journal for tax policy makers, academics and libraries.
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Articles from the current issue:
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Asprey collection launch Add to cart
01 Dec 2011
On 11 April 1972 the then Treasurer (the Right Honourable B.M. Snedden ,Q.C) announced that the government had decided to institute a full-scale public inquiry into the operation of the taxation system which would finally put the Government in a position to have an overall perspective on tax policy.
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Not for profit income tax exemption: Is there a hole in the bucket, dear Henry? Add to cart
01 Dec 2011
Australia’s Future Tax System Review, headed by the then head of the Australian Treasury, and the Productivity Commission’s Research Report on the not for profit sector, both examined the state of tax concessions to Australia’s not for profit sector in the light of the High Court’s decision in Commissioner of Taxation v Word Investments Ltd. Despite being unable to quantify with any certainty the pre- or post-Word Investments cost of the tax concessions, both Reports indicated their support for continuation of the income tax exemption. However, the government acted in the 2011 Budget to target the not for profit income tax concessions more precisely, mainly on competitive neutrality grounds.
This article examines the income tax exemption by applying the five taxation design principles, proposed in the Australia’s Future Tax System Review, for assessing tax expenditure. The conclusion is that the exemptions can be justified and, further, that a rationale for the exemption can be consistent with the reasoning in the Word Investments case.
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Incentivising private health insurance through the income tax regime: Capitalising on behavioural models Add to cart
01 Dec 2011
The Australian income tax regime is generally regarded as a mechanism by which the Federal Government raises revenue, with much of the revenue raised used to support public spending programs. A prime example of this type of spending program is health care. However, a government may also decide that the private sector should provide a greater share of the nation's health care. To achieve such a policy it can bring about change through positive regulation, or it can use the taxation regime, via tax expenditures, not to raise revenue but to steer or influence individuals in its desired direction. When used for this purpose, tax expenditures steer taxpayers towards or away from certain behaviour by either imposing costs on, or providing benefits to them. Within the context of the health sector, the Australian Federal Government deploys social steering via the tax system, with the Medicare Levy Surcharge and the 30 percent Private Health Insurance Rebate intended to steer taxpayer behaviour towards the Government’s policy goal of increasing the amount of health provision through the private sector. These steering mechanisms are complemented by the ‘Lifetime Health Cover Initiative’.
This article, through the lens of behavioural economics, considers the ways in which these assorted mechanisms might have been expected to operate and whether they encourage individuals to purchase private health insurance.
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Risk as a measure in taxing financial arrangements Add to cart
01 Dec 2011
Recent reform of the Australian laws for taxing financial instruments are expressed in terms of risk for the purpose of identifying the relevant taxpayer or characterising a financial arrangement, rather than using the traditional drafting terms of legal ownership by a taxpayer or legal form of the financial arrangements. Generally, this change in the way that the laws are expressed is for either efficiency reasons, as in the case of Div. 250, or for integrity reasons, as in the case of the debt/equity rules and the TOFA rules.
This paper reviews several of the changes to the way that the Australian legislation for taxing financial instruments is drafted where, previously, legal concepts for identifying the taxpayer were used and legal form was used for characterising a financial instrument, to the use of risk for both those purposes. It argues that risk is a better measure of who the taxpayer is and what the financial instrument is because that is consistent with the way that commerce operates.
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Addressing the hidden costs of automobile use in China: The potential role of tax Add to cart
01 Dec 2011
The seriously falling air quality has become the most notable domestic environmental concern in China. So far China has only had an environmentally-related tax and charge system. Although an excise tax (called the “consumption tax”) on transport fuel, in addition to the Value Added Tax (VAT), has been imposed in China for over two decades, it has proved to be inadequate in terms of addressing the country’s severe automobile pollution problems. Recent reforms in tax law and policy have lifted the role of taxation in environmental protection slightly. A more comprehensive fuel tax system is needed, however, to help address the hidden costs of automobile use and tackle automobile pollution in China.
The article suggests an environmental fuel tax, combined with a selection of other instruments such as regulation and standard-setting, could prove to be of real use in constraining the consumption of environmentally damaging fuel and abating automobile pollution.
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Tax policy simplification: An evaluation of the proposal for a standard deduction for work related expenses Add to cart
01 Dec 2011
This article suggests that the proposals for a standard deduction for work related expenses and the costs of managing tax affairs of individual taxpayers, due to be introduced from 1 July 2012, are flawed from a number of perspectives. After briefly reviewing international practice and examining the proposed policy option for Australia in some detail, the authors suggest that it might not be appropriate policy to provide such deductions in the first place.
The article then identifies a number of difficulties associated with the policy design of the standard deduction, focusing on three specific issues: the take up ratio of the proposed standard deduction option; the revenue impact; and the potential simplification impact of the proposed policy. In the concluding section, some modifications or alternatives to the currently proposed standard deduction are suggested. Overall, it is concluded that the proposed policy will not achieve its policy objectives, and that - in particular - it is very unlikely that there will be any significant simplification outcomes as a result of the policy proposal.
