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Volume 25, Issue 1
EDITORIAL
The 2023 issue of the Journal of Australian Taxation is contained in Volume 25(1) and a
special edition focusing on New Zealand in Volume 25(2). The editors are very grateful for
the hard work and dedicated effort of the guest editor of the special edition, Associate
Professor Jonathan Barrett in attracting the excellent papers for the second volume in 2023.
The editors recommend that readers take particular note of the introduction to the special
edition written by Jonathan. He makes a very apt statement as to the role of tax academics in
the following comment:
In short, as tax researchers, we can and should be taking our research to the public to promote
general debate about taxation, and tax justice in particular. If we fail to stake a claim in that
space, others may take it.
The first volume, 25(1) consists of four articles covering a wide range of taxation topics. The
Editors are grateful for the contribution made by the authors in this edition of the journal,
especially Professor Brett Freudenberg for his ongoing support of this journal.
The first article by Melissa Belle Isle, Brett Freudenberg and Tapan Sarker explores whether
the internal resource of understanding business tax, financial statements and/or computer
accounting software (CAS) by small business owners is related to their business success in
the service sector. The results demonstrate that small businesses with a higher understanding
of business tax and CAS achieve a higher value of gross annual revenue, as well as net annual
income. These results are important in demonstrating the need for small business owners to
improve their understanding of business tax and CAS can aid the overall success of their
business. The authors examined the outcome of the data collected from 116 small business
owners to understand in more depth what aids or hinders an increase in small business
owners (SBO) literacy. The article provides a broad summary of the importance of the three
literacies for small businesses, namely the importance of cash flow management concerning
the SBO’s literacy of financial statements, computer accounting software (CAS), and
business tax. The authors clearly demonstrate through their research that these literacies are
important in the management of the cash flow of the business. The surveys explored what
may aid or hinder the development of these literacies for SBOs through the interview of small
business experts. From these interviews a number of key inhibitors were identified including
time, lack of business acumen, low training, cost, and the focus on producing business
records for tax compliance rather than management practices. From these findings, the
authors were able to provide recommendations that could assist SBOs to improve their
understanding of these three important areas.
The second article is written by James McMillan and examines the links between Indonesia’s
tax collection performance and the design and operation of its tax compliance system through
a study of the tax audit practices and procedures of Indonesia’s tax authority, the Directorate
General of Taxation. The article considers the distortionary effect of some features of
Indonesia’s tax compliance approach under which audits tend to be focused largely on
taxpayers who are already compliant and the fact that audit activities are narrowly focused
and not risk based. The article also considers ways in which the Indonesian tax authorities
could expand tax audit coverage and modify audit procedures and thereby increase the effectiveness of their compliance activities in the future leading to improved revenue
collection outcomes.
The third article is written by Dominic Breznik and an earlier version of this article was
awarded the 2023 Forsyth Pose Scholarship by the Law Council of Australia. The article
critically examines the legislation which applies Australia’s capital gains tax regime to
partnership assets and contends that the design is peculiar. Dominic contends that it diverges
from the general law by treating partners as holding fractional interests in partnership assets
while relying on the same general law to quantify these interests. The article argues that the
design of the CGT regime was influenced by an assumption that the general law recognises
partners as holding direct interests in partnership assets. Dominic demonstrates that
inconsistent elements in the regime’s design have produced confusion concerning the
meaning and application of its provisions. Finally, he proposes reforms to the legislation
which governs the regime and the primary Australian Taxation Office ruling that is relevant
to these issues.
The fourth and final article in this volume is written Lisa Marriott and Max Rashbrooke and
examines the different approaches to tax concessions for political donations in Australia and
Aotearoa New Zealand (NZ). In Australia, a tax deduction may be claimed for a moderate
donation to a political party. Conversely, in NZ no tax concessions are available for
donations to political parties. The study concludes that while there are several benefits of
using the tax system to facilitate political donations, the two different policies align with the
two countries general approaches to using the tax system to influence behaviour. An analysis
of tax expenditures is used to support this argument.
John McLaren and John Minas
Editors 2023
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Volume 24, Issue 1
EDITORIAL
The 2022 issue of the Journal of Australian Taxation is contained in Volume 24 and consists
of five articles covering a wide range of taxation topics. The year 2022 was still a difficult
year with the COVID virus continuing to have an impact on those engaged in researching
taxation law. Many academics and practitioners were experiencing lockdown and related
fatigue. The Editor is grateful for the contribution made by the authors in this edition of the
journal, especially Professor Freudenberg for his ongoing support of this journal. Dr John
Minas from Curtin University has accepted a role as joint editor of the journal, and he will be
active in promoting the journal and encouraging tax academics to contribute in 2023 and
beyond.
The first article by Melissa Belle Isle, Brett Freudenberg and Tapan Sarker examined the
outcome of the data collected from 23 small business experts to understand in more depth
what aids or hinders an increase in small business owners (SBO) literacy. The article
provides a broad summary of the importance of the three literacies for small businesses,
namely the importance of cash flow management concerning the SBO’s literacy of financial
statements, computer accounting software (CAS), and business tax. The authors clearly
demonstrate through their research that these literacies are important in the management of
the cash flow of the business. The surveys explored what may aid or hinder the development
of these literacies for SBOs through the interview of small business experts. From these
interviews a number of key inhibitors were identified including time, lack of business
acumen, low training, cost, and the focus on producing business records for tax compliance
rather than management practices. From these findings, the authors were able to provide
recommendations that could assist SBOs to improve their understanding of these three
important areas.
The second article is written by Alexander Fullarton and Dale Pinto contend that the
Australian Taxation Office (ATO) practice of issuing opinions and taxation rulings for the
guidance of taxation practitioners compiling and submitting taxation returns does not always
result in greater clarity or certainty in the application of taxation laws. To illustrate that
argument the paper addresses the example wherein the ATO considers all animals used in a
business of primary production as trading stock. Their view is based on their interpretation of
the findings in the appeal case of Federal Commissioner of Taxation v Wade. The paper is
based on the Wade case which shows that the issue of how livestock should be treated for
taxation purposes may in fact be wrong. Some agricultural animals may in fact be capital
such as breeding stock and that they should not be treated as trading stock and on the revenue
account. It should be noted that the authors when referring to the Live Stock Schedules in
accounting form, as presented in Wade’s income tax return, used the words as they are
referenced, that is ‘Live Stock’ Schedule. Two words. At other times ‘livestock’ is one word.
The third article is written by Su Yee Liew, Chee Keong Choong and Lin Sea Lau and they
surveyed 384 respondents consisting of individuals and small to medium enterprise (SME)
owners to gauge the effectiveness of the Malaysian electronic tax filing system (e-filing), the
administration of the taxation system with tax compliance as the mediator. The study
investigated the impact of e-filing and the effectiveness of tax administration on tax revenue
in Malaysia, which is crucial for the government and the nation.Resultantly, tax compliance4
fully mediated the relationship between the effectiveness of tax administration and tax
revenue. Thus, the study presented a significant contribution to developing a new concept of
tax compliance regarding tax administration and tax revenue, which had not been
investigated.
The fourth article is written by several tax teachers involved in the management and
supervision of students in their respective university tax clinics. This article provides an
excellent examination of the role of the National Tax Clinic program and the benefits
provided to students working in the tax clinics. They are Annette Morgan, Brett Freudenberg,
Ann Kayis-Kumar, Van Le, Rob Whait, Michelle Cull, Donovan Castelyn and Connie Vitale.
The article provides a broad summary of Work Integrated Learning (WIL) and its
relationship with self-efficacy, and how the tax clinics established under the National Tax
Clinic Program have enabled the development of self-efficacy. Their research found an
increase in self-efficacy, with particularly strong growth in communication, coordination of
group tasks, presenting ideas and researching tax issues among student participants.
Moreover, through analysing student demographic data, the study identified key differences
within gender, age, and prior work experience.
The fifth article is written by Alexander Fullarton and Dale Pinto and builds on their previous
article included in this edition of the journal. The authors argue that the practice of accepting
ATO opinions without challenge can have extremely significant fiscal impacts on taxpayers
and tax collections. The authors warn that tax practitioners should not always consider that
the rulings, determinations, and advice provided by the ATO give the greater clarity and
certainty in the preparation and lodgement of taxation returns and the payment of tax that are
sought by practitioners. Tax agents are duty bound to take reasonable care to ensure that
taxation laws are applied correctly to the circumstances in relation to which they are
providing advice to a client, and in that context this article asserts that agents should not
accept that the ATO’s view on a matter is unquestionably correct. Further, it is noted that,
while the ATO provides guidance and views, their written advice usually contains a statement
to the effect that they are for guidance only and may not be binding in a court. Their written
opinions often include a specific disclaimer.