Editors 2024
The 2024 issue of the Journal of Australian Taxation is contained in Volume 26. The editors are very pleased that there are three groups of authors living in South Africa, Indonesia and India. Two of the papers provide a comparative study of non-compliance regulations and consumption taxes which include Australia in the study. The paper from the Indonesian authors examines the voluntary disclosure program in Indonesia. It is important that this journal publishes articles relating to other nations and their taxation systems along with articles focused on Australia and New Zealand.
The first article by Celeste Black examines the new Safeguard Mechanism rules, which came into effect on 1 July 2023, that give rise to a new emissions unit called the Safeguard Mechanism Credit unit (SMC), a new type of personal property which is bankable and tradeable. The reforms to the Safeguard Mechanism will also increase demand for Australia’s other emissions unit, the Australian Carbon Credit Unit (ACCU). This important step is designed to control and reduce the emissions of large industrial facilities. The specific tax rules for ACCUs that are found in Division 420 of the ITAA 1997 have been amended to extend to transactions involving the new SMCs, but the tax treatment diverges in some significant ways from the tax treatment of ACCUs. In this article, the tax treatment of ACCUs and SMCs are compared and contrasted with a focus on Safeguard Facilities and participants in the ACCU Scheme. Celeste also comments on the separate 2023 amendments to Division 420 that established concessional tax treatment for ACCUs issued to eligible primary producers. Division 420 was introduced to avoid the complexities and uncertainties that could otherwise have resulted from the application of the pre-existing tax rules to transactions involving emissions units. However, this goal of simplicity is being undermined by the 2023 amendments that have the effect of creating three tax approaches to units within Division 420. Although these variations may be justifiable on policy grounds, the added cost of complexity within the tax system should be recognised as well as the potential impact of differential tax treatment on the efficiency of the emissions unit market.
The second article is written by Jane Ndlovu and Luvuyo Poyana and provides a comparative cross-sectional study that analyses tax compliance frameworks across South Africa, Australia, and the United States. Despite amendments to the South African Tax Administration Act, subjective taxpayer behaviour remains a major factor in non-compliance. The primary goal of the paper is to suggest changes to South Africa’s tax penalty system by evaluating its effectiveness against those in Australia and the US. The article delves into the administration of tax non-compliance and understatement penalties, highlighting key similarities and differences. It identifies challenges from past litigations and provides policymakers with actionable insights. This nuanced comparison illuminates global tax penalty structures and informs future regulatory improvements.
The third article is written by John Tretola, and it examines in detail the psychological trait associated with Machiavelli and tax avoidance. Tax avoidance involves manipulating the tax system to achieve, usually by artificial non-commercial arrangements, a tax related outcome that is not intended by Parliament. The connection between Machiavellianism and tax avoidance lies in the strategic and manipulative nature of both concepts. However, whilst it is true that not all individuals who engage in tax avoidance are necessarily Machiavellian, it is very likely that nearly all Machiavellians will engage in tax avoidance due to their manipulative self-serving natures. This article compares the outcome of five known recent studies that explored the link between Machiavellianism and tax avoidance. These five studies took place in different countries but lead to the same ultimate conclusion that Machiavellianism behaviour leads to tax avoidance behaviour.
The fourth article is written by five authors including I Nyoman Yasa, Nyoman Herawati et al. The article investigates the role of fairness in voluntary disclosure programs (VDP) and its impact on taxpayer compliance behavior. It emphasises the need for aligned taxation regulations to enhance state revenue and tax equity. Using qualitative methods, the authors conducted interviews with regulators, academics, practitioners, and tax administrators from the Bali Tax Regional Office. Their findings indicated that VDP reflects fairness through higher tax rates and penalties, but fairness also requires consideration of legal certainty and economic factors to build public trust.
The fifth article is written by Matt Nichol and he examines the not-for-profit tax exemption for Australian Football League clubs in Australia. Sport holds a unique place in Australian society. Underlying this position is the tax exemption given to sport under s 50-45 of the Income Tax Assessment Act 1997 (Cth). This exemption does not differentiate between community and professional sport. The Australian Football League (‘AFL’) and its 18 clubs all enjoy not-for-profit status under the s 50-45 sports exemption and do not pay income tax. This article will argue that the AFL and its clubs should not be tax exempt. This article suggests reforms such as amending the s 50-45 exemption to only cover community clubs and leagues, taxing the commercial income of sports that relate to ordinary business income and treating sports as charities and requiring them to benefit the public.
The six and final article is written by Shivani Badola and Sacchidananda Mukherjee and where they explores VAT compliance costs and associated burdens, a topic of paramount importance in tax policy evaluation and reform. Tax compliance costs, which encompass the financial and non-financial burdens taxpayers face in meeting their tax obligations, present significant challenges, particularly in developing countries. Their analysis of the literature on the VAT compliance cost burden and the issues related to complying with the VAT regime in India, compared with developed nations (especially Australia), provides a foundation for understanding the tax landscape. With the advent of the Goods and Service Tax (GST) in India, comprehending the compliance burden faced by taxpayers has become even more critical. In this article they have evaluated the performance of the Indian VAT system compared to other nations, considering factors such as tax law complexity, administrative requirements, the capabilities of the tax departments in meeting taxpayers’ services and compliance needs, and monetary costs.
John McLaren and John Minas
Editors 2024