The Mills Oakley Tax Compliance Index

March, 2014

Courtesy of John Storey | Partner, Private Advisory

Like an out of control virus the multitude of tax laws, regulations, rulings and decisions expands every year, seemingly without limits.

Both sides of Australian politics profess to support small business. But currently, it is the government itself that is the biggest impediment to small business, in the form of red tape and regulation. And nothing contributes more than Australia’s labyrinthine tax system.

At Mills Oakley we’ve looked at how many pages of new “Tax Rules” were introduced in the time span outlined in each graph. Tax Rules include any tax related Legislation, Regulations, Explanatory Memoranda, Rulings, Determinations, Interpretive Decisions, Decision Impact Statements for both the Commonwealth and the States.

Of course, something as subjective as “tax compliance” cannot be scientifically calculated. For example some Tax Rules can actually help reduce compliance costs, such as redrafting poor legislation, or a new ruling that clarifies a difficult area of tax law. On the other hand, the Index does not pick up all sources of tax complexity. The Index only tracks “final” Tax Rules, so it excludes Bills, Draft Legislation and mere announcements (such as Budget announcements) for example, even though unenacted legislation sometimes needs to be carefully considered, particularly where it will have retrospective application (in fact unenacted tax announcements are a huge source of tax complexity). Similarly, draft tax Rulings are not counted (just finals). See below an example of a draft Ruling that requires immediate attention by some taxpayers.

Despite this, measuring the sheer amount of Tax Rules is a good start to measuring Australia’s tax compliance burden.

An updated Tax Compliance Index will be published in Mills Oakley’s newsletter The Tax Storey. To subscribe, please email John Storey at jstorey@millsoakley.com.au.

Graph A: October 2012 – September 2013issue 1 graph

Graph B: April 2013 – March 2014Capture

Graph C: July 2013 – June 2014

graph 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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