How did tax get so complex? In the 1950s Australia had a tax system made up of around 1080 pages of tax law. Since then, Governments have identified gaps, addressed omissions, and attempted to adapt the tax system to changes in business and society. Our tax system is now a complex patchwork of rules.

1. Complexity
A sketch in five slides
June 2015

2. How did it get so complex?
2
In the 1950s Australia had a
tax system made up of
around 1080 pages of tax
law.
Since then, Governments
have identified gaps,
addressed omissions, and
attempted to adapt the tax
system to changes in
business and society.
Our tax system is now a
complex patchwork of rules.

3. Layer on layer of complexity
3
As the world has become more
complex, so has Australian tax law.
We now have more than 14,000
pages of tax law dealing with
countless specific scenarios.
This has resulted from trying to
deliver different policy outcomes,
for different taxpayers, in different
situations. Having fewer policies
that apply to all taxpayers, rather
than a range of different policies
for different taxpayers, would help
to reduce complexity.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1951
1962
1971
1973
1980
1983
1994
1997
1998
1999
2000
2001
2002
2003
2005
2006
2007
2008
2010
2011
2012
2013
2014
2015
Pages
Year

4. 4
• More complexity means higher
compliance costs; that is, the
time and money the
community spends complying
with tax obligations.
• The most recent estimate
places the compliance costs
associated with taxes the ATO
administers in the order of
$40 billion each year.1
• Small business in particular
bears the burden of
compliance costs associated
with a complex system.
The knock-on effect of complexity
1. as reported in Australian Government, Re:think Tax Discussion Paper March 2015 (2015); see also Australian Government, The
Treasury, Stocktake of Regulation Final Report March 2015 (2015).

5. • 12.8 million Australians lodged personal tax returns.
• 73.5% of these used a tax agent or accountant.
• The average cost of managing tax affairs was $370 per
person - a total cost of more than $3 billion.
• 8.3 million had “simple tax affairs.”1
• But 5.4 million of these still used a tax agent or
accountant.
1 Simple tax affairs - includes anyone without any: net rental income, capital gains, business income, trust income or
income from certain overseas entities.
Individual impact: a 2012-13 snapshot

6. And for business, Australian tax,
is not as easy as…
6
Ease of paying taxes
2015 World Bank/PWC Rank
Hong Kong 4
Singapore 5
Canada 9
Denmark 12
Norway 15
United Kingdom 16
South Africa 19
Finland 21
New Zealand 22
Malta 26
Chile 29
Malaysia 32
Sweden 35
Australia 39
United States 47
World Bank Group & PricewaterhouseCoopers, Paying Taxes 2015 (2015) pp 152-154.