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Australian Tax Research Foundation (ATRF) materials

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Making a valuable contribution to the understanding and improvement of Australia's taxation system, the ATRF commissions research, organises conferences and seminars and subsequently publishes numerous papers and articles, the Foundation is instrumental in building an intellectual reservoir of tax reform proposals with the hope of creating a "tax vision" for Australia.

ATRF materials are now available from the Tax Knowledge eXchange for subscribers taking our Online Research option, or may be purchased on an individual basis. Find out more.

  • Tax facts fiction and reform paper

    Any debate over the merits of different tax systems and various reform options is typically highly controversial and it is not surprising that an unanimity of views is really achieved. This report is structured in such a way as to inform the reader about a broad range of tax issues by presenting them with the tax facts. With these facts, we hope the reader will gain an insight into the operation of the Australian tax system that will enable them to make an informed decision about the future direction of tax reform in Australia.

    This report begins by reviewing the Australian tax system in an international context and seeing how it fares. Also, the focus on the issues that have pushed tax reform back on the political agenda at both the Commonwealth and State levels of government in Australia. The report then proceeds to work its way through a number of important issues that have been the subject of particular debate. While most attention is given to Commonwealth taxes, some attention is given to particular State taxes, especially the payroll tax. 

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  • Taxing popularity: The story of taxation in Australia paper

    This paper grew from research on Australian taxation policy for a broader history of economic policy in Australia. The intention was to make accessible to social scientists interested in economic policy and history the background to current patterns of taxation in Australia. The author hopes that, by bringing together the diverse historical, economic and other material on taxation policy in this way, readers can gain a fuller understanding of what drives taxation policy and how this has affected the Australian economy and society, without their having to tackle the more esoteric and technical texts that tend to dominate the literature. The author also hopes that the book will encourage readers to delve more into the subject, and will further a greater understanding of the role of taxation in our society.

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  • The GST and Federal-State financial relations paper

    The implementation in July 2000 of the Goods and Services Tax represented a major reform in Australian tax policy. An integral part of this reform was a major change in the way in which financial relations between the Commonwealth and the States were organised. The new arrangements, implemented under the Intergovernmental Agreement, involved the earmarking of GST revenue for the States, an important innovation in federal financial relations. This paper provides a personal evaluation of the system’s first four years of operation, and proceeds to consider a series of possible reforms which might increase the net benefits of the system, preserving those aspects of the new system which the author considers to be valuable but improving those areas where inefficiencies or inequities exist.

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  • The thirty year problem: The politics of Australian tax reform paper

    Taxation policy has assumed a prominent position in Australian politics in recent years and this is particularly the case during election campaigns. From the National Tax Summit of 1985 to the bitterly contested 1993 federal election and the Howard Government’s historic implementation of a GST in 2000, taxation issues have never been very far from the news headlines.

    The Thirty Year Problem provides the first detailed assessment of the politics of Australian taxation published in over a decade. The book presents a systematic account of the account of the politics of Australian tax reform since the 1970s and then develops a clear explanation of what Prime Minister John Howard described as the ‘Thirty Year Problem’. Eccleston argues that while historically entrenched political institutions and practices hampered the tax reform process in Australia, there are tentative signsof more a more collaborative approach to policy making in the taxation arena.

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  • Taxing small businesses: Developing good tax policies paper

    This volume reports on the proceedings of an Atax Symposium held in Sydney on 22 August 2003 to examine the tax treatment in Australia of small businesses and the lessons to be learnt from the UK, EU and USA experience.

    The overriding objective of the Symposium was to identify good small business tax policies and strategies, the ultimate goal being to identify tax policy which encourage the growth and development of a vibrant small business sector.

    Professor Judith Freedman, Oxford examined the case for special treatment of SMEs along with th UK tax treatment of SMEs. Professor Stewart Karlinsky, San Jose State University, examined the US treatment of SMEs, focusing on the definition of what constitutes a small business.

    Australian policies were reviewed from a number of perspectives. Robert Warnock examined the key decision criteria SMEs must consider when determining which structure to adopt and Gary Payne examined the problems arising from current tax concessions for Australian SMEs. Peter Hendy reviewed regulatory issues, especially the impact of tax and employee obligations on SME and Cynthia Coleman and Chris Evans, the compliance cost issues.

    Tax authority perspectives were provided by Neil Mann from the ATO and Bob Smith from the NSW Office of State Revenue. The discussion in the Symposium plenary session was outlined by Peter Burn.

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  • Taxing personal capital gains: Operating cost implications paper

    This study investigates the impact of aspects of tax design on the operating costs of the tax system. It focuses on the Australian and UK regimes for taxing the capital gains of individuals, and contends that the compliance burden faced by personal taxpayers and the administrative costs incurred by revenue authorities are directly influenced by the design of the capital gains tax ("CGT") regimes in each country.

    The study suggests that recent Australian changes to the CGT regime (particularly the removal of indexation and averaging provisions) are not perceived to have helped to alleviate the compliance cost burden, although the introduction of the 50% CGT discount has not exacerbated the problem. In contrast, the recent introduction of taper relief in the UK is unequivocally perceived by practitioners in that  country to have increased CGT compliance costs. Partially as a result of this, the study shows that the contention that Australian CGT compliance costs are higher than those in the UK cannot be confirmed.

    The study concludes by identifying specific legislative changes that would address many of the operational cost concerns that are evident throughout the study. These include the phasing out of the "grandfathering" exemption together with the introduction of an annual exempt amount, and the rationalisation of business concessions in Australia; and the abolition of taper relief and its possible replacement with a 50% exclusion in the UK. More importantly, it seeks a more principled approach to the taxation of capital gains in both countries, and emphasises that legislative change can and should only be enacted with a full and clear understanding of the operating cost implications of that change.

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  • The hidden costs of the Superannuation Surcharge Tax paper

    This study into the Superannuation Surcharge Tax or SST concludes that SST is inefficient, inequitable,has high compliance costs on the superannuation industry, significantly increases some taxpayers’ effective marginal income tax rates and lacks transparency within the overall tax system.

    The SST is a hidden tax, with significant effects on the industry, many so-called higher income earners and, indirectly, on nearly all superannuation fund members. While it generated $699 million in revenue in 2000/01, tax compliance costs of the SST on the superannuation industry was around $76 million or 11% of SST tax revenue. The research found a significant impact on marginal income tax rates such as the case of taxpayers with high superannuation contributions where the rate went from 48.5% up to between 64.2% and 67.6% for taxable incomes between $65,720 and $79,802 in 2000/01.

    A key finding is that SST is now impacting at relatively lower income levels than when first introduced, and close to the highest-rate threshold of $60,000 for certain taxpayers who have high superannuation contributions. In its survey of the superannuation industry the research found that around 80% of fund managers rated the abolition of SST as a high priority.

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  • The impact of complexity upon tax compliance: A study of Australian personal taxpayers paper

    This study explores the impact of complexity upon unintentional non-compliance behaviour for personal taxpayers in Australia. While compliance behaviour has been a topic of considerable research internationally over the last three decades or so, attention has generally been focused on intentional compliance behaviour, and in particular, on tax evasion and the processes by which taxpayers form their intentions.

    In contrast, unintentional noncompliance as an area of study has largely been ignored both overseas and in Australia. This is in spite of the apparent potential it offers for tax authorities seeking to achieve improvements in compliance.

    These taxpayers have formed the intention to comply, but perhaps because of the complexity of the system itself, the outcome was not as they intended. It seems reasonable to expect that the tax authority would seek to remove or address such impediments to compliance where they were within its control or influence, and take advantage of all well intended taxpayers. This study notes that for tax authorities, action designed to address unintentional non-compliance behaviour by personal taxpayers may be both more timely and more effective in achieving improvements in compliance than developing and implementing strategies to either change taxpayers’ attitudes or to limit opportunities for tax evasion.

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  • Metamorphosis of the Australian income tax: 1866 to 1922 paper

    The essential purpose of this study is to identify the origins of the Australian income tax and the influences that shaped it. The study seeks to demonstrate that the origins of the New Zealand income tax are inseparably interwoven with those of the Australian income tax. Studying the early income taxes of the Australia and New Zealand assists in understanding the structure and content of some of the central provisions of the present income taxes. What becomes clear is that the story of income taxes in the Australian colonies is one of provisions bouncing from law to law and
    their eventual metamorphosis into the Australian federal income tax of 1915.

    Another reason why this study is important is because these early income taxes also influenced the income taxes of other countries. In some cases, such as South Africa, the influence was direct. However, it also seems that these early income taxes influenced the United Kingdom Colonial Model Income Tax of 1923 and, therefore, the income taxes of countries based on that Model.

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  • The cash economy and tax reform paper

    One of the arguments made for the introduction of a GST in Australia was its likely impact on the cash economy. This study by the Chris Bajada for the ATRF was the first review of the impact of the introduction of July 2000 Australian GST on the size of the cash economy.

    The study shows that over the two decades before the introduction of the cash economy, it was onaverage about 15% of GDP in Australia. Following the introduction of the GST, the it declined to 12.9% of GDP by September 2000 - but it had crept back up to 13.6% of GDP by the following December. This trend is in common with the New Zealand and Canadian experience. The study conjectures that this initial decline may be partly explained by the government's very public assertion that the cash economy was going to be hit hard by tax reform - resulting in some cash economy participants ceasing trading (at least temporarily) until they better understood the new tax

    The study found that a major cause was the participation by the household sector in the cash economy, contributing approximately 55% of the total activities taking place in the cash economy, rather than the business sector. Of all businesses participating in the cash economy, the services and construction industries appear to be the largest contributors. The study notes that reducing participation by household in the cash economy is the challenge for governments in the future.

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