Managing Tax System Complexity: Building Bridges Through Pre-Filled Tax Returns
Australian Tax Forum (2010), 25, pp. 247-276
30 Pages Posted: 13 Aug 2012
Date Written: August 2, 2012
Despite being consistently stated as an important characteristic of good tax policy, tax simplicity has largely been ignored in actual tax reform. After so many years and attempts, the goal of tax simplification in Australia appears to be as elusive as ever. The central tenets of this paper are that tax policy simplification is virtually not possible and that tax law simplification has limited benefits. In practice, therefore, it is argued that reduced tax complexity can be achieved mainly through administrative (or procedural) simplification. The paper then focuses on pre-filled income tax returns in Australia as a recent example of administrative simplification. We perceive pre-filling as the government’s attempt to build a further bridge between the Australian Taxation Office (ATO) and individual taxpayers, adding to the existing bridges between the ATO and taxpayers and tax practitioners. It is concluded that, at this early stage, the reactive and partial model in use in Australia (compared to Nordic and other initiatives) is a step in the right direction but has not yet led to significant operating cost savings. This may change if the recommendations of the Henry Review are fully accepted and implemented, possibly smoothing the pathway to total automation of tax return preparation.
Keywords: Tax simplicity, Australian tax policy
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