Journal of the Australasian Tax Teachers Association 2014 Vol. 9 No. 1
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A U S T R A L A S I A N TAX TEACHERS ASSOCIATION JOURNAL OF THE AUSTRALASIAN TAX TEACHERS ASSOCIATION 2014 Vol.9 No.1 Edited by Postal Address: JATTA, c/o School of LISA SAMARKOVSKI Taxation and Business Law University of New South Wales NSW 2052 Australia Kathrin Bain Ph: +61 2 9385 9541 E: [email protected] Journal of the Australasian Tax Teachers Association 2014 Vol. 9 No. 1 The Journal of the Australasian Tax Teachers Association (‘JATTA’) is a double blind, peer reviewed journal. The Journal is normally published annually, subsequent to the Association’s annual conference. The Australasian Tax Teachers Association (‘ATTA’) is a non-profit organisation established in 1987 with the goal of improving the standard of tax teaching in educational institutions across Australasia. Our members include tax academics, writers, and administrators from Australia and New Zealand. For more information about ATTA refer to our website (hosted by ATAX at the University of New South Wales) at http://www.asb.unsw.edu.au/schools/taxationandbusinesslaw/atta. Please direct your enquiries regarding the Journal to the Editor-in-Chief: Professor Dale Pinto Professor of Taxation Law School of Business Law and Taxation Curtin University GPO BOX U1987 Perth WA 6845 E: [email protected] Editorial Board of the Journal of Australasian Tax Teachers Association: Professor Dale Pinto, Curtin University, Perth, Australia (Editor-in-Chief) Professor Neil Brooks, Osgoode Hall Law School, York University, Toronto, Canada Associate Professor Paul Kenny, Flinders University, Adelaide, Australia Professor Margaret McKerchar, UNSW, Sydney, Australia Professor John Prebble, Victoria University of Wellington, NZ Professor Adrian Sawyer, University of Canterbury, NZ Professor Natalie Stoianoff, University of Technology Sydney, Australia Professor Miranda Stewart, University of Melbourne, Australia Professor Kerrie Sadiq Queensland University of Technology, Australia Associate Professor Andrew Smith, Victoria University, NZ ISSN: 1832-911X Volume 9 Number 1 published December 2014 Copyright © 2014 Australasian Tax Teachers Association Journal of the Australasian Tax Teachers Association 2014 Vol. 9 No. 1 TABLE OF CONTENTS Foreword Tax Debt Management in New Zealand and Australia LISA MARRIOTT ...................................................................................................................................................................... 1 Are You Still Here, Mr Haase? A Study of Australia’s Tax Rebates for Residents in Isolated Areas ALEXANDER ROBERT ‘LEX’ FULLARTON ......................................................................................................................... 24 Equity in the Amoral State: the Nexus between Charities, Gambling and the Taxation- Redistribution System JONATHAN BARRETT AND JOHN VEAL ............................................................................................................................. 64 Balance of Power Politics and Tax Reform HELEN HODGSON ................................................................................................................................................................. 79 The Meaning of ‘Market Value’ in Australia’s Income Tax Assessment Act 1997 NICHOLAS AUGUSTINOS ................................................................................................................................................... 103 The Road To Freedom? Hayek And New Zealand’s Tax Depreciation ROB VOSSLAMBER ............................................................................................................................................................ 126 Taxation and the Rational Theory of Size of Government in Multi-Electorate Political Systems: The Median of the Medians is King ALEX ROBSON .................................................................................................................................................................... 147 Data Choice In Capital Gains Realisation Response Studies — A Review JOHN MINAS ....................................................................................................................................................................... 157 Changing use of business structures: Have university business law teachers failed to reflect this in their teaching? BRETT FREUDENBERG AND DALE BOCCABELLA ......................................................................................................... 180 University Teaching: A Reflection on Tax Teaching and Cultural Diversity DIANE KRAAL .................................................................................................................................................................... 215 Using Schemas to Demonstrate the Methodology of Solving Complex Tax Problems: A Case Study ANNA MORTIMORE AND JENNIFER DICKFOS ............................................................................................................... 230 Can Teaching and Learning Taxation Be Fun While Still Maintaining Standards? HEATHER BUCHAN AND KARIN OLESEN ...................................................................................................................... 247 i Journal of the Australasian Tax Teachers Association 2014 Vol. 9 No. 1 FOREWORD The papers included in this edition of the Journal of the Australasian Tax Teachers Association (JATTA) are derived principally from papers presented at the 26th Annual Conference of the Australasian Tax Teachers’ Association (ATTA) held between Monday 20 January and Wednesday 22 January 2014 at Griffith University, Brisbane, Australia. The theme of the conference was ‘The Politics of Tax’, and the presenters were invited to submit papers that explore the way politics has influenced — and continues to influence — the tax system. While not all papers published in this edition reflect the conference theme, the published papers certainly reflect the breadth and depth of Australasian research with respect to taxation. Given the role of ATTA in supporting the work and professional development of tax teachers, it is also encouraging that a quarter of the papers explore themes that relate to the teaching and learning of tax. I would like to thank Dale Pinto, the Editor-in-Chief, and Brett Freudenberg, the conference organiser, for all of their support and helpful advice throughout the process of publishing this journal. Thank you, too, to the authors for entrusting their papers to my hands. Commiserations to those who were not successful this time. A big vote of thanks goes to those unsung heroes of academic publishing, the anonymous peer reviewers — the wonderful people who take on the role of assessing and refining the research of their peers without any personal recognition. I am deeply indebted to you, as are the authors, for your valuable contributions. Last but certainly not least, a very big thank you goes to the wonderful Trischa Mann, whose input as a professional editor and ex-lawyer were invaluable in publishing this edition. Lisa Samarkovski, Lecturer, Griffith University December 2014 ii Journal of the Australasian Tax Teachers Association 2014 Vol. 9 No. 1 TAX DEBT MANAGEMENT IN NEW ZEALAND AND AUSTRALIA LISA MARRIOTT* ABSTRACT This study investigates approaches to the management of tax debt in New Zealand and Australia. Levels of tax debt are high in both countries: 12 per cent of total tax revenue collected in New Zealand and 9 per cent in Australia. While both countries have a wide range of options to collect debt, Australia uses more of the available options. While tax authorities have a range of tools to assist with tax debt collection, the New Zealand and Australian tax authorities both hold large amounts of tax receivables. This suggests either that the current tools are not being utilised to the greatest extent to reduce tax debt or that the tools are insufficient to achieve the objective of collecting the maximum amount of tax revenue, taking into account available resources. Both countries have, as part of their debt book, large amounts of tax debt categorised by the tax authority as non-collectable. The rationale for retaining non-collectable debt as part of total debt is not evident. The research suggests that in some cases tax debtors are treated leniently by the tax authorities in New Zealand and Australia. In both countries there are multiple opportunities for tax debt, penalties and interest to be remitted or reduced. When compared with other debtors to the state, tax debtors appear to receive preferential treatment. * Associate Professor in Taxation at the School of Accounting and Commercial Law, Victoria University of Wellington, New Zealand. Contact details: +64 4 463 5938, email: [email protected]. 1 Journal of the Australasian Tax Teachers Association 2014 Vol. 9 No. 1 I INTRODUCTION This study compares the approaches to debt management by the tax authorities in Australia and New Zealand. Tax debts held by each agency are high. In New Zealand, the value of total tax debt held by the Inland Revenue Department (IRD) is 12 per cent of total annual tax revenue.1 In Australia, the equivalent value of tax debt held by the Australian Tax Office (ATO) is 9.1 per cent.2 These are economically significant sums in both countries. However, large sums of debt are not collected, and significant amounts of penalties and interest imposed when tax is unpaid are also uncollected. This has a number of effects. First, it potentially undermines the integrity of the tax system.