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Mining royalties provide a volatile source of revenue for state governments in Australia. We explore the effects of changes in royalty revenue received by a state government on current‐year budget decisions about expenditure, tax revenue and the budget surplus. The literature postulates different models for how lower‐level government budget decisions respond to a revenue windfall from a higher level of government. Empirical evidence on these models over 1998–2019 provides strong evidence that over a half of a royalty windfall becomes a change in budget expenditure. Estimates of changes to tax revenues and the surplus are not definitive nor robust. [ABSTRACT FROM AUTHOR]

Purpose: This study explores the scope, materiality and extent of environmental and social sustainability disclosure – as benchmarked against the Global Reporting Initiatives (GRI-G4) – of the top 10 logistics firms operating in Australia. It also investigates the relationships between the extent of environmental and social sustainability disclosure of these firms and their actual financial performance. Design/methodology/approach: The authors adopted an inductive case study approach for an in-depth investigation of the relationships among concepts. A content analysis of the firms' sustainability reports was performed to determine their pattern and extent of sustainability disclosure against the GRI framework. A disclosure–performance analysis (DPA) matrix was employed to relate the extent of environmental and social sustainability disclosure of these 10 firms with their actual financial performance (i.e. return on assets [ROA] and total revenue growth). Findings: This study found that the extent of sustainability reporting was relatively high on the labour practices and decent work subgroup, followed by the environmental dimension of the GRI-G4 framework. However, it was relatively low on the society, human rights and product responsibility subgroups of the GRI framework. The DPA revealed that "Leaders" (firms with higher sustainability disclosure levels) achieved significantly higher ROA. However, "Opportunists" (firms with lower sustainability disclosure levels) achieved higher levels of financial returns (i.e. ROA and total revenue growth) with less attention to sustainability issues, which contradicts the win-win view of the sustainability disclosure–financial performance relationship. Originality/value: First, this study contributes an in-depth review of sustainability disclosure practices of top logistics firms operating in Australia. Second, using DPA, it identifies the novel effects of environmental and social sustainability disclosure levels on these firms' financial performance. It also sheds further light on the potential effect of investments beyond substantial profitability for sustainability growth and corporate governance on the sustainability disclosure–financial performance relationship. [ABSTRACT FROM AUTHOR]

1 July 2020 marked the 20th anniversary of implementation of GST in Australia. It is not surprising that this is seen as an occasion for a review and reform of the scope and operation of GST and consideration of what reforms might be necessary. This article reflects on the objects of GST as part of the A New Tax System reform package, measures the performance of GST since its inception and concludes that Australia's GST system is not the sustainable, robust and reliable source of revenue for the States and Territories that it was intended to be. An examination of the design features of the GST system and scope concludes that the existing GST system is unlikely to provide a reliable revenue source necessary to be the dominant source of future revenue to satisfy the spending needs of the States and Territories. Further, the analysis of the revenue estimates indicates that the robust and growing revenue stream for the States and Territories is unlikely to be achieved by broadening the base and/or increasing the rate. However, if a number of 'policy gaps' in the GST system are addressed the revenue from GST could be restored to its initial 4 per cent of GDP. But fraud, evasion and non-compliance are inherent weaknesses of a value added tax system. By reference to the findings of the Black Economy Task Force, the article considers changes to the GST system consistent with the Task Force recommendations and the design of VAT systems internationally to limit further erosion of GST revenue. Lastly, the article addresses whether Australia would be better off staying with a value added tax system or if there are alternatives that might better achieve the reliability, stability and sustainability that governments require. [ABSTRACT FROM AUTHOR]

Goods and services tax (GST) revenues collected by the Commonwealth Government in Australia are provided in full as untied revenue grants to the State and Territory governments. The hypothecation of GST revenues in this way provides a reasonably secure foundation for federal financial relations in Australia. However, Australia's federation has been marked by continuing change in the vertical sharing of government functions, costs and revenues, and State fiscal security is potentially vulnerable in these changing circumstances. The advantages and disadvantages of the GST revenue arrangements have themselves changed over time since the GST was introduced in 2000, with implications both for the GST as a tax and for the evolution of the Australian federation. This article discusses these developments and some possible future directions. [ABSTRACT FROM AUTHOR]

This study employs the dynamic recursive Computable General Equilibrium (CGE) approach to model Australia's economy. This carbon tax policy is designed based on Australia's economy, starting at A$23/tCO2, increasing over time and imposing uniformly on all industries. This study proposes two carbon tax policies and three revenue recycling approaches, and the prices and GDP variations are estimated during 2020 and 2035. This study confirms introducing a carbon tax policy decreases Australia's carbon emissions and reduces real consumption and GDP if it is not accompanied by a revenue recycling policy. But following a revenue-neutral policy and redirecting the carbon tax revenue into the economy through reducing income taxes and investing in research and development (R&D) projects leads to economic growth. This study confirms the implementation of a carbon tax associated with a suitable revenue recycling approach benefits Australia both economically and environmentally. [ABSTRACT FROM AUTHOR]

This paper uses detailed information about household supermarket purchases from the Australian Nielsen Homescan Survey to estimate price elasticities of demand for a range of food categories. An instrumental variable strategy is employed to address endogeneity issues. The estimates obtained from our analysis are used to study five scenarios in which the rate of the goods and services tax (GST) on food categories is increased or in which the tax base is broadened to include currently GST‐free categories. Our findings reveal that there is considerable scope for raising revenue by increasing the rate and broadening the tax base. [ABSTRACT FROM AUTHOR]

This article examines the merits of taxation reform to return income taxation revenues in whole or part to the states. In 2016, the Australian Prime Minister, the Honourable Malcolm Turnbull MP, proposed an income taxation sharing arrangement between the Commonwealth and the states which would allow the states to levy a proportion of income taxation. This proposal was rejected by all Australian states (with the exception of Western Australia) at the Council of Australian Government (COAG) meeting in April 2016. However, once again, the issue has become relevant amid renewed calls for a more equitable sharing of Commonwealth goods and services tax (GST) revenue between the states. Indeed, the inequitable redistribution of GST revenue has contributed to renewed calls for states like Western Australia to secede from the Australian federation. Additionally, together with the continued deterioration of state revenue bases, the authors argue that the issue of restoring income taxation powers to the states is worthy of reconsideration and has a number of benefits in terms of subsidiarity. These include increasing state financial autonomy, and providing for a more stable, simple and predictable state budget framework that would result from a known revenue stream. [ABSTRACT FROM AUTHOR]

Visiting friends and relatives (VFR) contributes significantly to tourism activity and revenues, accounting for about 48 percent of domestic travel in Australia. Implicit in most discussions of VFR travel is that it represents one homogeneous market. This paper examines this assumption and demonstrates – based on data from 67,024 domestic and international tourists to Australia – that this is not the case. The profile of people visiting friends (VFs) differs significantly from that of people visiting relatives (VRs). This finding has major implications for tourism marketing which need to target VFs or VRs in distinctly different ways, rather than generically marketing to VFR travellers. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this study is to examine the relative and the incremental value relevance of book value and earnings in the Australian market in the context of the 2008-2009 global financial crisis (GFC) and the non-crisis period (NCP). Design/methodology/approach – Least square regressions are used to examine the research questions. Changes in the coefficient estimates and the relative explanatory power (adjusted R2) of book value (BV) and earnings between the GFC and the NCP are examined. Findings – The findings suggest that both BV and earnings are value relevant in the Australian market surrounding the GFC. There were structural breaks in the association of BV and earnings with firms’ market value. The value relevance of earnings has increased and that of BV has decreased during the GFC compared to the NCP. During the study period, the explanatory power of earnings was greater than that of the BV. Research limitations/implications – The single country context examined limits the generalisability of the findings. Practical implications – The importance of this study lies in its showing the sustained importance of earnings in security valuation even during a period of macroeconomic uncertainty. Australian accounting standards have been shaped by a balance sheet focus. The recent move towards the fair value-based International Financial Reporting Standards (IFRS) has further enhanced the focus on the balance sheet. Nevertheless, the evidence in the present study demonstrates that even for a country with a balance sheet focus, the value relevance of earnings increases during a GFC. Hence, it is the earnings number, rather than the balance sheet, which should receive greater attention from accounting regulators and auditors. Originality/value – This is the first known study to examine the value relevance of fundamental accounting information, such as BV and earnings, in the context of the 2008-2009 GFC. It extends prior research in the context of the 1997 Asian financial crisis and provides evidence on the impact of a worldwide exogenous shock on the value relevance of BV and earnings from a relatively mature and developed country with different legal, institutional and enforcement backgrounds. [ABSTRACT FROM AUTHOR]

Using a large multi-country multi-industry sample of over 158,000 companies, the early-stage company sector is documented to have sizable destruction of revenues and jobs and as well as sizable gross creation of revenues and jobs. The creation aspect has captured the dominant attention of researchers, commentators, and policy makers. Destruction, despite its large magnitude, has long been a backwater of research and most commentary on this sector. Destruction is not simply non-growth but rather prior growth that is subsequently reversed. This paper analyzes creation and destruction evidence across 10 different countries and across eight different major industry groups. Yearly growth/decline rates using revenues and headcount for Years 2 to 5 are analyzed. In each of the three growth years examined there are large amounts of destruction as well as creation simultaneously occurring. For example, in Year 5 gross revenue destruction is 34% of gross revenue creation whilst gross job destruction is 65% of gross job creation. A small percentage of companies accounts for a large percentage of the total job and revenue destruction each year. This small percentage of large destroyers is especially interesting because they had to have had, by necessity, prior sizable creation. This rapid rise and subsequent rapid fall has been very much ignored in the research literature. Regression analysis highlights this aspect for the sample of destroyers. The diverse sources of revenue and job destruction are discussed and potential fruitful research directions highlighted. [ABSTRACT FROM PUBLISHER]

The mining boom in Australia since 2003 has produced significant economic benefits for regional, State and National economies, creating new job opportunities and revenue flows. Despite the contribution of the resources sector to economic growth, questions are frequently raised about the concomitant negative social, economic and environmental impacts. The Surat Basin in southern Queensland is a traditional agricultural region with a small but growing coal mining sector and a rapidly developing liquefied natural gas industry (mainly associated with extracting coal seam gas). In this paper, the preferences of residents in Brisbane, the State capital, are explored in relation to the relative importance of social, economic and environmental impacts of the resource boom in the Surat Basin. A choice modelling experiment was conducted to assess the trade-offs Brisbane residents would make (in monetary terms) between the economic benefits and the associated costs of increased mining activity on local communities. The results identify the strength of concerns about community and environmental impacts and can potentially be used to help evaluate the net benefits of resource development. [ABSTRACT FROM AUTHOR]

There has been increasing interest in the economic value of event tourism activities in regional and rural communities of Australia to help revive local economies. One touted solution is to encourage regional communities to embrace more fully older 'grey nomads' as they travel for six months or more around Australia. However, little attention has been paid to older adults who attend regular, short duration caravanning rallies as members of a caravan club. This research is based on a survey of 90 respondents who attended a caravan rally in 2012, and measures the economic contribution of these grey caravanners to a regional area while attending the organized event. Initial findings revealed that the group's expenditure was found to be greater than previously acknowledged for older travellers of this type. As such, it is argued that this group presents a growing and sustainable revenue source for regional communities who are willing to support these regularly staged rallies. Given the exploratory nature of the initial study, further research is needed in order to obtain a more detailed understanding of the economic contribution of this form of event related tourism activity in the Australian context. [ABSTRACT FROM AUTHOR]

Taxpayers' tax attributes (the focus in this paper is on tax losses, both revenue and CGT losses) are extinguished on death, and they are not available to the deceased's [trust] estate or beneficiaries. This extinguishment rule stands in stark contrast to the rules that apply upon the death of a stakeholder in a company or a fixed trust with tax losses. Here, through the fiction of "continuity of life", there is no extinguishment rule. Further, the extinguishment rule is also anomalous in the context of the extremely generous treatment given to the "event of death" throughout many other areas of the income tax. The death of a taxpayer is overwhelmingly treated as an occasion where relief is given. No doubt, the extremely generous treatment is, in part, designed to avoid the appearance of a "death duty". Yet, the extinguishment rule has not attracted the same concessional treatment. This article compares the tax treatment of death where tax losses are owned directly with the situation where tax losses are "owned" through entities. The article also compares the extinguishment rule with the concessional treatment of death involved in a number of the most important areas of the income tax. The conclusion of the article is that the current extinguishment rule is inequitable and anomalous, and its continuance is difficult to justify. [ABSTRACT FROM AUTHOR]

In 16 years on the Federal Court bench, Hill J made major a contribution to the entire field of tax jurisprudence. The concept of "ordinary income", at the core of the income tax, was developed and clarified by Hill J in a number of judgments. All of Hill J's significant judgments on ordinary income survived appeal to the High Court (or special leave to appeal). This article explores Hill J's contribution to four main categories of ordinary income cases: (A) ordinary income from business; (B) ordinary income of individuals; (C) gambling cases and (D) the role of accounting evidence. [ABSTRACT FROM AUTHOR]

A nation's thin capitalisation laws are an important instrument for preventing revenue loss resulting from excessive allocation of debt to resident operations. These laws can also act as a tool for regulating the structures and processes of entities within a nation's borders. The principal purpose of this paper is to establish the merits of Australia's thin capitalisation laws based on three criteria: the extent to which they comply with OECD guidelines; the extent to which they reflect the policy behind their enactment; and their strength relative to the thin capitalisation regimes of fellow OECD member countries. The paper will also provide comment on the recent proposals to reform the thin capitalisation regime following the 2013-14 Federal Budget release. [ABSTRACT FROM AUTHOR]

The requirements for listed corporations to disclose material tax-related information has been in the spotlight over the last few years in Australasia, especially in regard to the large banks that have a major presence on both sides of the Tasman. In this paper we examine how listed companies have made disclosures in their financial statements in relation to material tax disputes with the respective revenue authorities. We suggest that the more recent cooperative compliance agreement initiative may have a significant impact going forward. For the analysis we draw some common themes from the companies reviewed, including that companies will tend to make disclosures only after their tax positions have been challenged by the revenue authorities and they intend to dispute the revenue authority's approach. [ABSTRACT FROM AUTHOR]

This is one of a series of articles that will consider the tax issues associated with infrastructure ownership. We will suggest reforms that governments should consider to realise maximum value for these assets, without compromising future revenue through creating tax loopholes or providing overly generous tax concessions. This article discusses the application of Div 6C of Pt III of the Income Tax Assessment Act 1936 to infrastructure projects. Division 6C is concerned with income of certain trading trusts, and is an anti-avoidance measure, the purpose of which is to limit the forms of income that can benefit from "flow-through" taxation. The article argues that the application of Div 6C to infrastructure assets introduces complexity, uncertainty and undue administration. These risks and costs necessarily translate into lower prices for infrastructure assets. The article contends that, if Australian taxpayers wish to maximise the value that they receive for privatised infrastructure assets, Div 6C needs to be reformed. [ABSTRACT FROM AUTHOR]