The ATO releases the Australian Longitudinal Individuals File (ALIFE) in 2018. ALIFE is a de-identified database of 10% of individual taxpayer income tax returns, giving researchers unprecedented access to large volumes data. Our project will explore ALIFE across three themes, focused on tax policy innovation.

Theme 1: Politics, discretionary trusts and small business

There are more than half a million discretionary trusts in Australia, and many are used is a small business context. The taxation of discretionary trust distributions is complex, controversial and a political talking point. In 2017, the Australian Labor Party adopted a policy to tax discretionary trust income at a minimum of 30%. The Coalition doesn’t agree.

Our research will use ALIFE data to investigate several aspects of trust income in individual and family taxable income, focusing on primary production trusts, shifts away from discretionary trusts to partnerships, and the risks and rewards of using discretionary trusts as a business form. Our results will inform tax policy generally. We are also interested in finding solutions for the financial plight of farmers and small businesses in drought declared areas, where discretionary trusts are often used. We are particularly concerned about the unintended consequences of Family Trust Elections.

Theme 2: Tax compliance costs

Seventy per cent of small businesses (SBEs) in Australia are unincorporated, which results in their assessable income and deductions being included in the business owner/s’ tax return, together with their other sources of income such as dividends, salaries and rental income. Statutory, regulatory and tax compliance, and tax planning, is a major concern for SBE owners. Our research will use ALIFE data to understand the relationship between deductions claimed for managing a taxpayer’s tax affairs and their different income sources. We are also interested in the impact of the ATO’s technology solutions on the cost of managing the tax affairs of individuals with less complex tax affairs.

Theme 3: Aggressive tax behaviour and SBE tax governance

The Australian tax system operates on a self-assessment basis that relies on taxpayer self-governance and appropriate behaviour. It is uncontested that SBEs play a significant role in jobs creation and growth in Australia. We posit that it is essential that the individuals who start up SBEs understand their own tax obligations as an essential element of tax policy, in underpinning the self-assessment system, as cash management tool and in managing tax risk. Our research will use ALIFE data to investigate aggressive financing strategies resulting in negative gearing, and aggressive work-related deductions.

Project members

Dr Thea Voogt

Lecturer
TC Beirne School of Law

Professor Ross Grantham

Professor - Commercial Law
TC Beirne School of Law
Martie-Louise Verreynne

Martie-Louise Verreynne

Professor of Innovation and Deputy Head of School
UQ Business School