Revenue Law Journal

'...Nowhere man sitting in his nowhere land': The continuing saga of cross border arbitrage

Michael Dirkis — Wed, 01 May 2013 20:53:23 PDT

The media in Australia clamours about reports that Google pays a very small tax bill on their income of several hundreds of millions of dollars. The perceived ‘failure’ of Australia’s tax laws to capture income/gains that it was believed should have been taxed in Australia, has been much criticised. This article discusses the problems, which include inadequate domestic residence and source ‘rules’; cross border domestic residence and source ‘rules’ mis-matches; and domestic courts’ encountering in the omestic transfer pricing legislation.

Small business entity tax concessions: Through the eyes of the practitioner

Stephen Marsden et al. — Wed, 01 May 2013 20:53:22 PDT

Australia’s small business sector has pursued often-competing imperatives of simplicity, equity and efficiency in the income tax regime (particularly focusing on the notion of simplicity) over the last decade. In 2001, there was an attempt to provide such simplification and reduce the compliance burden faced by Australian small businesses through the ‘simplified tax system’ (‘STS’). However, despite amendments over the years, the regime is much criticised. This article explores how the STS (now known as the ‘small business entity’ regime or ‘SBE’) is utilised from the perspective of tax practitioners, by analysing their recommendations to small business clients in respect of the regime. The results indicate that practitioners believe the regime did nothing to simplify the tax system for small businesses or reduce tax compliance costs. Indeed, the practitioners believed that the introduction of small business concessions had actually achieved the opposite result — it had increased tax compliance costs for their small business clients. However, tax practitioners still recommend the regime highly because it minimises their client’s tax liability.

High-frequency trading and a financial transactions tax

Jim Corkery et al. — Sun, 06 Jan 2013 15:02:59 PST

High-frequency trading is the practice of using computerised algorithms to hold investment positions for very short periods of time, influence the market and profit from the distortions. Analysis of the practice reveals that it may threaten the stability of the market. For example, it contributed to the 6 May 2010 ‘flash crash’. This article considers how to limit high-frequency trading and minimise its negative effects, including the efficacy of levying a financial transactions tax on high-frequency trades or financial transactions generally. It also notes the possible application of insider trading laws to high-frequency trading.

The impact of tax professionals upon the compliance behavior of Australian individual taxpayers

Ken Devos — Wed, 12 Dec 2012 22:47:20 PST

The tax compliance literature indicates that limited research attention has been given to gauging the influence of tax professionals upon individual taxpayer compliance behaviour. This potential gap in the literature needs to be addressed given that tax professionals not only act as intermediaries between the Australian Taxation Office (ATO) and the majority of individual taxpayers but they can directly influence taxpayers’ ethical behaviour and the level of compliance.

This empirical study explored whether or not a relationship exists between the advices provided by tax professionals and the compliance behaviour of Australian individual taxpayers (both evaders and non-evaders) taken from the taxpayers’ perspective. The findings revealed that there was a statistically significant relationship between the need for engaging tax professionals and compliance behaviour generally. There was also evidence of a statistically significant relationship between tax professionals’ aggressive advice and the compliance behaviour of non-evaders. It is envisaged that this study’s results will provide useful information for the Australian Taxation Office and have implications for tax policy development.

Is section 8-1(2)(b) inoperative?

Daniel Diaz — Mon, 09 Jul 2012 22:48:47 PDT

Exclusions of otherwise deductible losses or outgoings can be categorised according to the mechanism of their application to a taxpayer’s circumstances. Analysis of decisions regarding deductions where s 8-1(2)(b) appears relevant reveals that s 8-1(2)(b) is merely a restatement of the principles underlying s 8-1(1). As a result, s 8-1(2)(b) is effectively inoperative.

Judicial review of the Accountants’ Concession: a case for improving tax administration and accountability

John Azzi — Wed, 27 Jun 2012 22:11:46 PDT

Judicial review of the decision of the Australian Taxation Office (‘ATO’) to lift the Accountant’s Concession has proved a fruitless and expensive exercise for taxpayers. The Accountant’s Concession lays down administrative arrangements restricting access to papers prepared by professional accounting advisers. While it has been suggested reliance on ‘exceptional circumstances’ to lift the concession best serves capital and tax markets, elsewhere it has been argued that the concession must be rethought if the policy of enabling full and frank disclosure is to be achieved.

This article examines initiatives aimed at shielding tax advice of accountants from the Tax Commissioner’s coercive access powers under the Income Tax Assessment Act 1936 (the ‘Act’) and elevating the current administrative arrangement into the statute. This would make the limited procedural legitimate expectation a substantive procedural right. This would remove the different treatment of lawyers and accountants offering tax advice and eradicate the delays and uncertainty associated with the separate tax advice privilege recommended by the Australian Law Reform Commission.

Personal Services Income: where to from here?

Tom Delany — Wed, 09 May 2012 20:20:27 PDT

In Australia, the regime for the taxation of Personal Services Income (PSI) has suffered from being complex, unclear and uncertain, leading to poor compliance with the rules. Personal services income is defined as a reward for, or the result of, one’s personal efforts. Prior to the introduction of the regime, the tax system was plagued with a major inequity: it was possible for individuals to reduce their tax liability by alienating their PSI to an associated company (or other legal entity) and by claiming inappropriate ‘business’ deductions. This article reviews the current interpretation of the PSI rules, evaluates the Board of Taxation and the Henry Review findings and suggests an approach that reduces the potential application of Part IVA.

GST and residential premises - which intention is relevant?

John Tretola et al. — Mon, 07 May 2012 18:38:13 PDT

Sale of ‘residences’ normally do not attract capital gains tax, unless the sale is part of an enterprise. Australian courts have been inconsistent in interpreting the expression ‘intended to be occupied and is capable of being occupied as a residence’ in the GST legislation. This article explores whether a consistent approach has now emerged.

The obligation to obey tax laws

Enrico Mercuri — Wed, 18 Apr 2012 15:58:18 PDT

The obligation to pay tax is a controversial one. Comparatively little has been written from a philosophical point of view. The obligation is something that is assumed to exist mainly because of the coercive powers of the relevant legislation and enforcement processes. This discussion starts from the taxpayer’s perspective. It is not focused on what responses are necessary from legislative requirements but on what responses are necessary from moral ones.

We have an idea what governments do with the taxes they collect. Amongst other causes they support health care, national defence, social services, roads, rail, the police force and fire protection. Not all individuals can afford taxes, so sliding scales apply: the richer pay more to help support the less fortunate.

No flight, no supply - Qantas Airways Ltd v Commissioner of Taxation

Kristen Zornada — Wed, 28 Mar 2012 22:33:25 PDT

This case note examines the Federal Court decision in Qantas Airways Limited v Commissioner of Taxation, which considered what the ‘taxable supply’ is, if any, in relation to domestic air travel, where the passenger cancels or does not show up for a flight, and does not obtain a refund. The case note examines how, despite a potentially absurd outcome, the decision is sound and, if upheld by the High Court, may catalyse a change in the law.