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BACC3004- Tax Law

Assignment 2

This assignment requires students to keep a reflective journal of what they learn throughout the semester. Students will research relevant articles, then write a summary and reflection on each article to demonstrate their understanding of the materials learned from each week. Selection of these article should explore theoretical and practical issues in taxation law.


Reflective Journal

Tax law of Australia (Articles)

1.          Legal and Institutional Framework

A taxation article about Australia is presented here. As a possible tax professional, you may wish to be familiar with the major aspects of the Australian tax system’s organizational structure. In this essay, you will be given a brief overview. It is stated in this article that the Australian tax system does not only serve legitimate purposes but fair treatment of all Australians.

A thorough understanding of how Australian tax works are critically important for individuals who wish to enter the field. Tax legislation is enacted by the government under section 51(ii) of the Australian constitution. In addition to examining the Income Tax Assessment Act 1997 and Income Tax Rates Act 1986, this article discusses other legislation.

An article in this collection explains how Australia’s tax system evolved into what it is today. A discussion of what the best methods for taxation are is discussed in this article. Taxation is guided by six fundamental principles: equity, effectiveness, simplicity, certainty, and neutrality. Equitable tax burden distribution refers to distributing tax burden among the community equally. The results are a robust, real economy because effective taxes do not stifle economic decisions.

Tax design and implementation should be simple in order to reduce uncertainty for taxpayers and the burden on the regulatory system. In order to prepare appropriately, taxpayers need to know in advance if they will be subject to a tax burden. By taxing alternate commodities, the price of those commodities shouldn’t be intentionally misled or modified.

In addition to discussing the taxation life cycle, the article describes how taxation is reviewed, the taxation policies, drafts, administrations and governance of taxation.

It is the objective of this article to provide an in-depth understanding of how tax organizations operate for someone new to the field. Students of taxes are recommended to keep an eye on such sites for the release of new legislation regarding taxes.

2. Full history of Australia’s Tax system:

It discusses both important administrative measures at the provincial and national levels of tax administration and examines historical trends in Australian taxes.

This paper began with a historical outline of taxation in Australia by pointing out the era last century when every colony in Australia had a unique taxation system based nearly exclusively on customary practices and excise charges. Instead of ideals of justice or effectiveness, administration issues were the driving forces behind these tax regimes.

During the 2nd world war, there were significant changes in the tax system of Australia, with a rise in the tax revenue of over 22% until the end of the war. Various taxation methods and their development are discussed in this paper. There has been discussion of resource taxes, customs duties, goods and services tax, wholesale sales taxes, indirect taxes, taxation of retirement savings, and business income tax. Taxes for the citizens and international tax trends have been compared to the details of all the taxes mentioned.

The development of the tax system over history can give a better understanding of society, the ways in which it thinks and its governing ideas. By learning how past government members made mistakes, it aims to help today’s government avoid those mistakes. In addition, it aims to help people know what has already happened in taxation and attempts to make recommendations for how a variety of taxation can be improved.

By explaining the taxation history to the government, this article aims to assist people in comprehending the aspects of current taxation customary practices and regulations by helping them learn to understand what has developed in the history of taxation, customary practices, legislation, rules and regulations.  

3. At a glance 

Comparison to the European Average is based on a survey. As it pertains to multinational companies, this article examines Australia’s complex business income tax system and compares it to the average for Europe.

This survey revealed that Australia’s tax system is much more complex than the EU average, because of its complex anti-avoidance laws, such as transfer pricing requirements, general anti-avoidance laws, and regulations applied to foreign-owned companies. Australian tax procedures and characteristics such as draft tax legislation are similar to the European average when it comes to taxation.

Even more intriguing results are revealed upon a closer inspection. Taxation laws in Australia are more complicated compared to those in the remaining European countries, for instance, the time between notification and adoption of a tax law reform.

Specifically, I explain the taxation intricacies faced by multinationals in Australia and compare the outcome with the other European nations.

Due to complex anti-avoidance regulations such as transfer pricing, basic anti-avoidance laws, and CFC restrictions, Australian tax law is more complex than the European average. A new scholarly paper is added to the existing literature, laying the groundwork for future Australian research.

Despite the complexity of the process of enacting tax laws in Australia, the reverse is true of the procedure of appealing tax decisions. However, further research reveals substantial variations in the other three characteristics of the tax structure (compare OECD average).

Furthermore, every country member of the OECD will have access to additional data, which will allow them to track the impact of specific tax measures as well as changes in other peer nations. In my study environment, it is not possible to draw conclusions about the correct degree of tax complexity or distinguish between required and unnecessary complexity.

4. Tax morale in Australia: What shapes it and has it changed over time?

According to this article, people who pay taxes globally voluntarily do so without being compelled to do so. This manuscript fills a gap in existing literature in this regard. It’s also vital to understand what influences an individual’s taxation morale, as several academic studies have shown taxation morale is key in predicting ethical behaviour.

This essay aims at discovering how taxation morale is formed or influenced. Using data from the Australian waves of the 1981 and 1995 World Values Survey, this research will examine faith and morale convictions and their impact on taxation morale in Australia.

Moreover, it has shown that Australian taxation morale has improved dramatically since the 1980s and has done so more quickly than most other OECD nations. In addition, it highlights possible reasons behind this rise.

The author concludes that, even though it is impossible to know if a higher level of tax compliance has been achieved over time because of an increase in tax morale, it is clear from the statistics that national policy measures have had a significant influence on Australia’s tax complying levels.

Furthermore, the writers have realized the limits of their research, which proves that they have understood the reasons why this research paper may be wrong. It is important to note that the World Values Survey features relatively generic information; therefore, views and concerns about taxes are overlooked.

It has never been experimentally tested the theories that have been proposed in the preceding part, which focus on why taxation morals might have increased in Australia between 1981 and 1995. It might be worthwhile to evaluate attitudes to taxation before and after a substantial shift in the taxation system (Torgler & Murphy, 2004); this could be considered a future study recommendation.

5. Does Australia have a good income tax system?

Australian Catholic University students Anthony Stokes and Sarah Wright wrote this article. For the purpose of this article, we will evaluate Australia’s taxation system in order to determine if it is a just, simple, and straightforward system for high-income earners. Using the current income tax system as an example, Stokes & Wright (2013) concluded that it is highly inequitable for high-income individuals and asset holders.

During a period when several countries are revising their tax systems, this study examines the effectiveness and effects of Australia’s fiscal policy. Australia’s top tax rate of 45 percentage points is unusually high, even though its threshold for applying it is comparatively low at $180,000 Australian dollars. This paper has attempted to explain what makes up a fair tax system, a system that balances horizontal equity and vertical equity. The principle of horizontal equity requires that similar persons be treated equally.

It has been demonstrated in this article that fairness, efficiency, and simplicity are universally recognized as the essentials of an effective tax system. The underlying taxation structure of Australia fails to meet these minimum requirements, according to this analysis. The Australian Taxation Office’s criteria for calculating income tax has long been a major source of frustration for Australian individuals and businesses. A tax increase is undeniably involved with the Goods and Services Tax. At the same time, tax avoidance and minimization decrease the progressive nature of individual income taxation.

When comparing higher-income earners to regular salary and pay employers, this paper shows they have a lot more potential to reduce their tax payments. In this paper, we propose modifying Australia’s current income tax structure to enhance equity and the effective amount of income taxation.

It is also suggested that more tax preventive measures and programs will be developed to benefit the wealthy. The current study provides approaches for reducing the work perverse incentives caused by high marginal tax rates that are specifically designed to motivate greater participation in the workforce among low and middle-income workers and those on the margins (Stokes & Wright, 2013).

Despite focusing on taxation runs expenses studies conducted over the past 20 years, this article explains the larger historical context, along with that they seem to have resurfaced after nearly a decade of neglect.

An important aim of the article is to summarize recent studies related to taxes on running expenses in one place. This statement mirrors the author’s intent to compile a comprehensive database of operations cost analyses. This article discusses a number of studies that have occurred recently, as well as the larger historical backdrop and the causes for the success of the studies into taxation running expenses.

As part of this article, the annexe describes the majority of the important studies on administrative and regulatory costs published since 1980. This overview highlights the variety of tax structures and the extent to which they have been studied as well as a variety of regional approaches used in operational cost studies.

Due to this early neglect, the paper states that this field has already passed its prime. Within the last 20 years, tax-related issues are moving from the peripheral to the centre. A range of research has been conducted on burden regulation, and this can provide a basis for investigation.

It also asserts that tax laws should be designed and executed together. The construction of taxation laws should not proceed without careful consideration of the impact of proposed amendments on operational expenses of the taxation system. It is critical that operational costs study ensures that people who execute policies are aware of and prepared for the operational consequences of their choices in the future.

6. Australian taxation law

Ideally, people will benefit if they trade goods and services, whereas previously they would not be able to do so. Taxes aim to reduce the number of mutually beneficial transactions between suppliers and consumers by reducing the difference between the rates that producers demand for their production and the rates that customers are willing to pay, in short.

As a result of legal and financial complexity, rising compliance costs and administrative costs are also on the rise. One of the biggest problems with legal complexity is that it is unclear. In their attempt to minimize the financial costs of high marginal tax rates, all those who dismiss or trivialize the effects of higher marginal tax rates point to earlier research on some observable characteristics of labor markets and conclude incorrectly that these characteristics suggest the presence of little or no dead weight. In the article, it is stated that tax cuts increase growth by lowering deadweight losses. Taxation reduction led to higher per capita financial growth in nations that significantly reduced taxes between 1980 and 2000. Additionally, she argues that Australia’s current tax and expenditure rates seem to indicate greater taxes would have little influence on financial motivations.

In this paper, we discuss how Cost-benefit analysis can lead to the growth of the state beyond a point where it is economically feasible, and this could result in disastrous legislative decisions. An MCF represents the monetary impact of a tax on either labour creation, conservation, investment, or spending.

In addition to reducing people’s ability to enjoy the fruits of their labour, individual income taxes create perverse incentives that make employees poorer. A dollar increase in government income actually costs a business a great deal more than the dollar it pays in taxes since all types of tax affect financial decisions and shift business growth from largest to smallest value utilizes.

‘Australia’s taxation system is based around four key concepts.’ –

1) Fair taxation

People should be required to pay their fair share of tax, but this should not be done at the point of a gun. This will cause resentment and hostility towards the Australian Government.

2) Legislative authority

Parliament passes legislation about paying taxes, so citizens should follow them; otherwise, there would be no law and order in Australia. Additionally, Parliament makes rulings on who needs to pay taxes and different types of incomes. For example, the government made a ruling that some companies have to pay taxes on their incomes while others don’t have to if their turnover is less than $2 million per year (Fry et al., 2017).

3) Levy

Taxes are not just rules and legislation by parliament, they are also an obligation or duty that must be paid by citizens or certain groups of people following the law.

4) Administrative responsibility

There are different administrative organisations for each state which control who pays tax and how much they need to pay (e.g., ATO). Additionally, it’s the job of the Australia Revenue Agency (ARA) to collect taxes from citizens so they can provide public services like health care and education (Cevik et al., 2018). This is done through different ways such as withholding taxes, self-assessment, and general compliance; but each state will have different ways (e.g., ATO vs ARA) as well as different rules for companies (e.g., ASIC vs ATO).

7. MYEFO (2021)

The tax law of Australia has defined by federal legislation. Such as the statutory interpretation, income tax law and fringe benefits tax law which are entrenched in the Constitution of Australia. The Commonwealth itself levies several taxes. Indirect taxation includes goods and services tax (GST), a percentage consumption tax, currently set at 10%. The states levy stamp duty levied on property transactions and gaming taxes such as those on lotteries.

The Australian taxation system is a self-assessment system of payment by individuals and businesses to federal, state and local governments. Under this system, taxpayers must correctly record and pay their income tax and GST obligations by the due date (including payment of estimated tax where applicable) and self assess their income tax liability, gains, losses and entitlements by completing a tax return.

The taxation system is enforced by the Australian Taxation Office, an agency of the Australian Government responsible for administering the Commonwealth’s tax and superannuation laws. The ATO also has responsibilities about other areas of taxation including:

Several related government agencies provide advice on taxation matters; to assist individuals with understanding their taxation obligations; regulate certain taxpayer behaviours, and combat international avoidance arrangements.

The Australian constitution provides that the Commonwealth shall not impose any excise or duty on articles coming into Australia from one State in respect to which there is no countervailing excise or duty in that State or Territory. This means that goods made in one Australian State and sold in another cannot be taxed. However, the federal government imposes a tax called Goods and Services Tax (GST) which is collected by the suppliers of many goods and services at the time they are sold.

Figure from:-

The tax law of Australia has defined by federal legislation. Several related government agencies provide advice on taxation matters; to assist individuals with understanding their taxation obligations, and combat international avoidance arrangements.

The Australian constitution provides that the Commonwealth shall not impose any excise or duty on articles coming into Australia from one State in respect to which there is no countervailing excise or duty in that State. This means that goods made in one Australian State and sold in another cannot be taxed. However, the federal government imposes a tax called Goods and Services Tax (GST) which is collected by the suppliers of many goods and services at the time they are sold.

9. A dual income tax system for Australian small business achieving greater tax neutrality

There are two students from Griffith University who wrote this paper, both Trad and Freudenberg. Having a focus on small enterprises in Australia, this paper discusses the concept of tax neutrality in relation to the taxation of company forms. In this paper, we examine whether the implementation of a dual income tax model (DIT) would succeed in meeting this goal (Trad & Freudenberg, 2018).

In the Australian corporate sector, the DIT is thought to reduce structural biases and promote taxation neutrality. Further, a closer alignment of rates of personal income taxes and corporate income taxes would increase the prospects of taxation neutrality being achieved.

Several newly elected Australian governments were contemplating ways to obtain tax revenue from small businesses, according to this article. Businesses of all sizes are often perceived to have particular tax needs, and they often campaign for special assistance and compromises to mitigate for what is perceived to be their lack of ability. Finally, these compromises and adjustments could also lead to greater complexity and discrepancy. Therefore, any suggestions for change should be thoroughly analyzed.

A tax neutral strategy and the concept of tax neutrality were discussed in this paper. As a result of this discussion, there is evidence that tax has an impact on selecting company structures in Australia.

The study acknowledges that the Australian Government has over the years implemented several tax breaks to assist small businesses. However, the effectiveness of these tax incentives is debatable, due to the competition these incentives generate, and potential conflict of interest (Trad & Freudenberg, 2018).

A study shows that the cost of conformity increases as the complexity of the industry increases. In conclusion, this report suggests that DIT could improve tax neutrality in Australia and alleviate structural prejudices, but further investigation is needed to create a complete plan.

9. Australian State income taxes during the interwar years – Implications of economic integration for financing social services 

This article deals with the effects of the increase in taxpayer movement, post-federation political cooperation, and increasing reliance on income taxes on Australian states between 1915 and 1942.

Additionally, this article explains how state income tax systems also responded to the Depression’s financial crisis, which resulted in both reduced government revenue and raised financial obligations for states. Additionally, the paper attempts to determine how Australia’s federal tax and social security measures were established during 1942 and 1944 based on the principles, structure, and management of its state income tax system.

According to the author, Australia’s unitary taxation system was neither designed from scratch nor was it a hurried reaction to fight taxes or macroeconomic management concerns.

In this article, the author demonstrates how its framework stems from Australian state income tax frameworks during the interwar period, has been altered by financial crises during the Great Depression, and has been attached to contracts between the federal government and state governments that allocated federal earnings to less wealthy areas of law.

According to this article, the most important aspect of the unified income tax plan was that it laid the groundwork for Australia’s unique “compensable” social welfare system, which was in place throughout World War II but was maintained without the introduction of social insurance, which would have had a significant impact on salary legislation and the “fair wage” foundations of Australia’s sociability.

Considering Australia relies on Government income tax to fund its social welfare system, it can be difficult to generate sufficient resources for adequate social security. It is believed that significant reforms to the tax system were necessary during the depression in order to implement income taxes on the pay rate population, which had little ability to save for the end of the year. Withholding taxes from paychecks was correctly attempted in the Great Depression by states using innovative techniques.


In theory, the taxation system in Australia is a good way to fund public services and other aspects of society; but sometimes the laws can become complicated to understand which can make it difficult for accountants. However, these professionals should continue striving to keep up-to-date with all changes in legislation and strive to offer general information about taxes that may affect particular business transactions (Sábo et al., 2020). This will help ensure that they stay within their responsibility as outlined by the common law.


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