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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Influence of ownership structure and corporate governance on effective tax rates and tax planning: Malaysian evidence Add to cart
01 Dec 2012
The effective tax rate (ETR) may be used to measure the impact of changes in a country’s tax policy on a company’s tax burden. Our study examines if the ownership structure and the firm’s corporate governance mechanisms affects the ETRs and the tax planning of Malaysian public listed companies (PLCs). Using a sample of 345 PLCs, we find that government ownership, management power, and total accruals are important determinants of companies ETRs. Additionally, the results show that companies that mitigate the agency conflicts with lower total accruals are more likely to have lower ETRs, and executive compensation is a good predictor of long-term tax planning by PLCs. Although preferential tax treatments for certain industries like tourism and manufacturing help lower ETRs, our findings suggest industry firm size is related to ETR and it is a political asset that helps to maximize the country’s wealth.
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Tensions in tax decision-making: The decision to not collect tax Add to cart
01 Dec 2012
The Commissioner of Taxation is vested with the power to assess tax, and with the power to collect tax which is due and owing. However, the Commissioner and the responsible Minister also have a statutory power to not collect tax, thus creating an inherent tension in the administrative decision making process.
This paper outlines the statutory sources of power, judicial precedent, and administrative guidance relating to the decision to not collect tax. While the decision to not collect tax has a threshold test of taxpayer hardship, the hardship test is a necessary but not sufficient condition, and if hardship is established the decision-maker then has a discretion as to whether or not to provide relief from the liability to pay tax.
The paper argues that tensions in this decision process arise in relation to both the decision-maker, and the considerations in exercising the administrative discretion to not collect tax. In relation to the former, the paper questions whether it is appropriate to have the power to collect, and the power to not collect, vested with the same decision-maker. The paper further argues, in relation to the considerations in exercising the discretionary power, that the discretion should not be unfettered, but the factors for consideration should be limited.
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On regulatory change and “retrospectivity”: Insights from the CPRS and the RSPT Add to cart
01 Dec 2012
This paper examines the appropriateness and consequences of compensation and transitional arrangements such as “grandfathering” in regulatory design, with particular reference to two public policy initiatives championed by the Rudd Labor Government in Australia between 2007 and 2010 – the Carbon Pollution Reduction Scheme (CPRS) and the Resources Super Profits Tax (RSPT). In particular, this paper explores the efficacy of alternative approaches to compensation and transitional relief where regulatory change has a retrospective impact. In doing so it considers factors that may be relevant to the choice of whether or not to provide any compensatory or transitional relief.
This paper also highlights the risks associated with governments taking inconsistent approaches to compensation and transitional relief on policy reform, and argues that the different approaches taken to compensation with respect to the CPRS and the RSPT was a factor that contributed to the uncertainty and opposition that enveloped both policy proposals.
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The tax compliance costs of large corporate taxpayers in Indonesia Add to cart
01 Dec 2012
This article reports the results of the first research on the compliance costs of large corporate taxpayers in Indonesia in 2010. Using a mail survey of 3,000 questionnaires with a response rate of 8.2%, the main finding is that the gross costs of compliance for large taxpayers are significant, estimated to be IDR 12.3 trillion, and account for 3.16% of tax revenue for large corporations and 0.19% of the Gross Domestic Product in 2010. Overall average costs per large company are IDR420,933, 442 (around A$55,000 at the December 2010 exchange rate). Average costs differ markedly across the various economic sectors. The majority of the costs are incurred on human resources in the companies (staff, managers, directors).
The research shows that costs are regressive in terms of the number of employees, the amount of total assets, the annual turnover, and the tax payments. The components of compliance costs are broken down into: routine and non-routine costs 86% and 14%, internal and external costs 73% and 27%, computational costs and planning costs 73% and 27%, respectively. Cash flow benefits and tax deductibility benefits, both being offsets of gross costs, represent 24% and 25% of gross compliance costs respectively.
The article concludes by succinctly setting this timely research in an international context, identifying its limitations and discussing the study’s significance for Indonesian tax policy, with a recommendation for further work in the tax compliance costs field.
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The world according to GAAR Add to cart
01 Dec 2012
Australia’s current general anti-avoidance rule, which defines tax avoidance as a scheme entered into with the dominant purpose of obtaining a tax benefit, has been criticised for creating too much taxpayer uncertainty, with the main object of such criticism being the test to determine the taxpayer’s dominant purpose. To determine whether the taxpayer has such a dominant purpose, in principle the courts and the Commissioner of Taxation consider eight specific factors, although how much consideration is to be given to each factor is left to the court’s determination. Based on a sample of 95 cases, this paper uses logistic regression to infer the direction and impact of these factors, as well as additional issues such as whether the scheme resulted in a tax benefit, on the probability of an outcome favouring the Commissioner.
The suggestive inferences should be extremely useful to litigants within Australia’s taxation system and in those jurisdictions considering implementing a general anti-avoidance rule. The inferences also cast a spotlight on deficiencies within Australia’s current general anti-avoidance rule. These deficiencies raise various policy issues including whether Part IVA is operating as intended, whether it is helping to create a more equitable tax system, and whether the government or the judiciary controls the boundaries of tax avoidance. The inferences also raise issues with respect to the administration of tax avoidance under the cooperative compliance model. In addition, the inferences highlight issues with the use of specific anti-avoidance rules instead of, or in concert with, a general anti-avoidance rule. These policy issues are discussed.
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The expansion of the bilateral tax treaty network in the 1990s: The OECD’s role in international tax coordination Add to cart
01 Dec 2012
This paper examines the role of the OECD in international tax coordination, addressing particularly the drastic increase in the number of bilateral tax treaties signed by non-OECD member countries in the 1990s. The paper’s argument is based on a detailed study of the OECD’s activities with regard to tax treaties and non-OECD member countries in the 1990s. The analysis is conducted through a political science theoretical framework according to which the framing of a policy idea and diffusion mechanisms are central in explaining the adoption of a policy in diverse national settings.
The paper demonstrates that the OECD created the necessary conditions for the spread of bilateral tax treaties. The organization strategically promoted tax treaties to non-OECD member countries through various means such as conferences, workshops, seminars, training, and in-country assistance. Furthermore, the organization created and maintained a synergy among a policy (tax treaty), the market economy paradigm and problems of double taxation, uncertainty and lack of information. Also, the organization confined the discussions on tax treaties to technical considerations.
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A comparative analysis of tax advisers’ perception of small business tax law complexity: United States, Australia and New Zealand Add to cart
01 Dec 2012
There is no doubt that the tax laws of many countries are complex and difficult to comply with administratively. In particular, Australia, New Zealand and the United States have tax systems that are generally recognized as complex especially for small businesses. They also have the distinction of having had a significant portion of their tax policy literature address the issue of complexity and its impact. What has been given scant recognition is the ability of different tax systems to learn from the successes and failures of each other.
This article will try to bridge that gap by comparing tax advisers’ perceptions of tax law complexities in these three jurisdictions that impact a crucial segment of the economy, small business.
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Looking for suitable presumptive income tax design for large informal economies in terms of principles of a good tax system Add to cart
01 Dec 2012
This paper is concerned with the search for an appropriate Presumptive Income Tax (PIT) design for taxing large informal economies in developing countries.The mixed results from PIT designs in developing Finding a suitable PIT design is essential of existing PIT regimes in most developing countries. To find a suitable PIT design, this paper compares common PIT designs on their merits and flaws using the commonly-accepted principles of a good tax system as a normative guide.
The causes of the informal economy are also taken into account in this search for the most effective PIT design. This paper concludes that asset-based PIT regimes suit large informal economies in developing countries better than alternative PIT designs when assessed under the principles of a good tax system.
