Variation in the Cost of Managing Tax Affairs for Taxpayers Lodging via E-filing and Tax Agents
Harb Jawad, Elizabeth Morton and David Bond
Abstract
With the introduction of pre-filled income-related data and e-filing to the Australian taxation system, the Australian Taxation Office (ATO) had expected that the compliance cost burden would be eased, and that taxpayers’ compliance behaviour would improve. We investigate whether such technological advancement coincides with a reduction in taxpayers’ costs of managing their tax affairs pursuant to section 25-5 of the ‘Income Tax Assessment Act 1997’ (Cth) (or item “D10”). Using ATO published data, this study investigates the variation in D10 between taxpayers lodging their tax returns via: (1) e-filing: and (2) using the services of tax agents. The study reveals several novel findings: (1) we find that in contrast to tax agent-lodged returns, the percentage of taxpayers claiming D10 over e-filing has decreased, which coincides with the implementation of pre-filled data; (2) the average amount claimed at D10 by e-fillers is increasing at a faster rate relative to taxpayers lodging via tax agents, (3) low-income earners lodging via e-filing have claimed a higher average D10 amount relative to high-income earners; (4) there is an increasing number of e-fillers claiming more than $3,000 at D10 and paying zero taxes; and, (5) If the government impose a cap of $3,000 in D10 deduction, we estimate it could generate a yearly increase of $188 million in government revenues. We, therefore, reflect on the issues of complexity and compliance inherent and exemplified by the costs of managing tax affairs.
*This article was published by the Australian Tax Review, which is ranked as an “A” category journal under the Australian Business Deans’ Council journal quality list.
Variation between Australian Taxpayers Lodging Their Income Tax Returns via Mytax and Tax Agents
Harb Jawad, Elizabeth Morton and Siddhi Pittayachawan
Abstract
Using the Australian Taxation Office (ATO) published data alongside other legislation and legal materials, this article provides a detailed comparison of the core variation in taxpayers who self-lodge their income tax returns online via myTax and those who lodge via tax agents. Two perspectives are covered; first, a comparison of the regulatory setting underpinning the use of the
two means of tax lodgement followed by a descriptive statistical analysis to compare the deduction behaviour of the taxpayers using each means of tax lodgement. This article finds that the key difference between the means of tax lodgement is the use of data analytics tools to eradicate the behaviour of non-compliant taxpayers: the Commissioner uses special tools over myTax compared to tax agents. We also found that the average amount claimed by the taxpayers, and the percentage of claimers over all the different means of tax lodgement, has been generally decreasing over time. However, we found that taxpayers differ in their deduction behaviour over the two means of tax lodgement, with those using tax agents recording an overall faster percentage decrease in the average amount claimed as tax deductions than those lodging via myTax, despite those using tax agents claiming more on average than myTax users. Fewer taxpayers lodging via myTax are claiming higher amounts of total deduction on average over the years examined. Due to these regulatory and deduction behaviour differences, we conclude that the drivers of taxpayers’ compliance behaviour may differ based on the means of tax lodgement which warrant further investigation from a compliance risk perspective.
*This article was published by the New Zealand Journal of Taxation Law and Policy, which is ranked as an “A” category journal under the Australian Business Deans’ Council journal quality list.
Acceptance of myTax in Australia
Harb Jawad, Elizabeth Morton and Venkateshwaran Narayanan
Abstract
With the evolving nature of the digital economy, the adoption of electronic income tax return lodgement, or “e-filing”, is on the rise around the world. This study uses the extended technology acceptance model to understand the factors that influence the intention of Australian taxpayers to lodge their income tax returns using the Australian e-filing system (myTax). A total of 193 survey responses were collected from a sample of Australian taxpayers aged 18 years and over who had previously used myTax. Employing structural equation modelling to analyse the data, this research revealed the following key points: (1) this study partially validates the ability of the technology acceptance model to predict the intention of Australian taxpayers to use myTax, (2) it has confirmed the influence of certain external variables within the model and (3) it has revealed that perceived information quality and perceived ease of use were the main predictors of taxpayers’ behavioural intention to use myTax. Based on these findings, implications and recommendations to assist the Australian Taxation Office to improve the quality of the myTax lodgement system are outlined, along with future research opportunities.
*This article was published by the Australian Tax Forum, which is ranked as an “A*” category journal under the Australian Business Deans’ Council journal quality list.
Jawad Harb 