Australian Tax Forum

Articles from the current issue:

• Determinants of level of taxation: An empirical study of OECD countries from 2006 to 2016

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  The paper provides an empirical examination of the determinants of tax level (tax-to-GDP ratio) among OECD member countries from 2006 to 2016. Conventional regression studies of tax level tend to focus on two sets of factors: structural (such as GDP per capita, output share of agriculture, age dependency ratio, etc) and institutional (such as corruption, political stability, etc). The present paper employs a different approach that emphasises the role of tax policy and tax administration in explaining tax level in developed countries. More specifically, it seeks to determine the quantitative impacts of tax rate, tax compliance burden, governance, level of economic development and trade openness on tax level of OECD member countries.

• In defence of the income tax

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  It is a privilege to present the 2019 Justice Graham Hill Memorial Lecture. Graham combined the best of the academic and the professional in taxation.1 Justice Hill was interested in public policy as demonstrated by his involvement in the work of the Taxation Review Committee in the 1970s which led to the landmark Asprey Report, with his contribution particularly in the context of the gift and estate duty.² He was not afraid to stand up for an unpopular cause. One of the members of the Taxation Review Committee was Professor Ross Parsons of University of Sydney Law School. Over 30 years ago on the eve of retirement at the end of 1986 he delivered a paper entitled Income Taxation: An Institution in Decay³ which described the income tax as a supernova – a star in its death throes when it grows enormously in size and intensity and then withers away. While he did not foresee the end of the income tax he thought it would be significantly replaced by a consumption tax, the underlying theme being that the income tax was incoherent and by implication that a VAT/GST was coherent.

• The Impact of Australia’s income tax system on company ownership structure

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  This study examines the links between investor residency, tax status and the corporate ownership structure of Australian listed companies. We find that there is a preference by resident individuals, corporate companies and superannuation funds to hold a  ignificantly higher proportion of shares in companies that pay fully franked dividends, relative to other companies. Furthermore, our results show that non-resident investors, in general, hold a significantly higher proportion of shares in companies that pay either unfranked or partially franked dividends, relative to other companies. Finally, there is some evidence that resident individual investors hold a significantly higher proportion of shares in capital appreciating, as opposed to dividend paying, companies, which is consistent with resident individuals seeking to utilise the tax concessions they are afforded on long-term capital gains.

• Tax compliance in the new millennium: Understanding the variables

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  Taxpayer compliance is a critical part of any tax system, as without it, the integrity of the tax system can be undermined. Previously, Jackson and Milliron published a comprehensive study reviewing and synthesising the findings of tax compliance studies conducted prior to 1986; highlighting the variables, methodologies and theories. Richardson and Sawyer built upon this research by synthesising the work from 1986 to 1997. Similarly this current research seeks to build upon these two important studies and extend our knowledge by analysing tax compliance studies in terms of ‘variables’ identified from January 1998 to December 2017.

• Tax certainty and taxation of international pension funds: The complicating and costly role of domestic courts

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  Noting the heightened concern about tax certainty from ‘certain court decisions’ and recent updates to international tax rules designed to promote certainty in the international taxation of pension funds, this article examines a UK and an Australian court decision regarding the international taxation of pensions. It finds that despite the different legal frameworks applying in each case, both decisions heighten concerns about tax uncertainty by commonly employing a domestic approach to construe the relevant international instrument, albeit that both decisions purport to follow international customary rules of interpretation.