Tax and Transfer Policy Institute

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Promoting empirical economic research produced by the TTPI at the Australian National University.

The Tax and Transfer Policy Institute of The Australian National University (ANU) aims to lead the debate on tax and transfer policy in Australia.

28/10/2026

Navigating transfer pricing complexity: what would help multinationals comply?

In a 2023 survey of tax experts in German multinational firms, 69% of respondents stated that full transfer pricing compliance was not possible because of the system’s complexity, even when their firms actively aimed to comply. More than half (56%) considered their compliance efforts disproportionate to the volume of their cross-border transactions.

Transfer pricing is widely regarded by firms and tax advisors as one of the most complex areas of tax law. The arm’s length principle – that related parties should set prices as unrelated parties would under comparable circumstances – is difficult to apply when truly comparable market transactions rarely exist.

So, what could help?

In their new Austaxpolicy article, Kim Alina Schulz and Caren Sureth-Sloane identify three reforms to reduce complexity in the existing system:

1. Standardisation: An internationally coordinated standardised transfer pricing documentation system

2. Cooperation: Joint transfer pricing audits conducted simultaneously by domestic and foreign tax authorities

3. Transparency: A publicly accessible database with arm’s length pricing ranges for typical functions.

Their findings suggest that meaningful simplification does not require abandoning the arm’s length principle. Greater international coordination, transparency, and trust may help improve compliance – more than additional documentation requirements or higher audit intensity – while reducing costs.

Read more:

WritingHow can transfer pricing complexity be reduced? Research identifies three ways to lower compliance costs for multinational firms: standardisation, cooperation and transparency.

27/10/2026

Between 2010 and 2020, reported autism prevalence doubled in the US. But it tripled in Australia. What is driving this unprecedented growth?

In a new article on Austaxpolicy, we unpack recent research published in the Journal of Health Economics. The data reveals a compelling finding: the introduction of the NDIS is a primary driver of this surge, accounting for 47% of all new autism diagnoses in Australia since 2013.

When government programs tie vital support funding to specific diagnostic thresholds, incentives change. A Level 2 or 3 diagnosis grants access to tens of thousands of dollars in support, putting heavy pressure on clinicians to diagnose in a patient's immediate interest. It’s a classic economic lesson, but one that means roughly $4.5 billion of NDIS expenditure is a direct result of diagnoses generated by the scheme's existence.

So, how do we fix these distorted incentives and build a sustainable system that actually helps children thrive?

Read the full analysis and policy recommendations here: https://www.austaxpolicy.com/nearly-half-of-australias-autism-diagnoses-caused-by-the-ndis/

In our recent study, we examine whether the introduction of the NDIS itself has driven the surge in formal autism diagnoses.

21/10/2026

How does the ATO's use of AI undermine procedural fairness and trust?

The Australian Taxation Office (ATO) uses artificial intelligence (AI) to help assess potentially non-compliant taxpayer claims. While none of the 43 AI models examined by the Australian National Audit Office made fully automated decisions, seven automatically selected cases for compliance action.

The ATO maintains that decisions adversely affecting taxpayers are always made by a human. However, procedural fairness depends on whether taxpayers can understand what an AI model contributed to their case. A human at the end of an AI-assisted process does not guarantee that.

In a new Austaxpolicy article, Dika Sembiring found that only 29.7% of surveyed Western Australian small businesses knew that the ATO uses AI. This gap matters for an agency whose purpose includes fostering willing participation in the tax system.

Sembiring argues that where AI materially informs an adverse outcome, taxpayers should be told in plain language whether a model contributed to the outcome and what it indicated. This is particularly important in tax disputes where taxpayers carry the burden of proving an assessment is excessive or incorrect.

Transparency is fundamental to public trust in the ATO. Taxpayers who can understand and respond to a model's contribution have a stronger basis for accepting an outcome than those expected to accept it on faith.

This is not a new demand on the government. It is what the hearing rule in administrative law has asked all along.

Read the full article: https://www.austaxpolicy.com/can-wa-small-businesses-answer-the-algorithm-ai-the-ato-and-the-right-to-respond/

How does the ATO’s use of AI affect small businesses’ tax rights? Dika Sembiring examines transparency, procedural fairness and taxpayers’ right to respond to AI-assisted compliance decisions.

12/10/2026

Australia’s new capital gains tax system aims to account for inflation, but could its treatment of capital losses lead to higher tax burdens? James Giesecke and Jason Nassios examine how the asymmetric recognition of gains and losses affects investors, particularly those holding riskier assets over longer periods, and consider alternative approaches to CGT reform.

Read more here 👇

How Australia's new capital gains tax indexation system could increase tax burdens by failing to recognise real losses, particularly for riskier assets.

07/10/2026

How does Australia distribute GST among the states, and what role do resource exports play in the broader fiscal equation?

In a new article for Austaxpolicy, David Higginbottom unpacks the findings of the Productivity Commission’s recent interim report on the 2018 GST reforms. The piece provides a detailed look at the mechanics of horizontal fiscal equalisation, how the WA GST floor operates in practice, and why the treatment of input-tax credits for extractive industries complicates the national revenue picture.

For an informative breakdown of the current GST distribution model and a policy proposal for greater transparency in resource taxation, read the full article here:

The only reason Western Australia’s GST deal continues to survive is that few Australians understand how bad it is.

04/10/2026

How does GDP overlook the wellbeing of the next generation?

When governments debate economic progress or inequality they typically rely on evidence derived from GDP and taxation statistics used to measure the distribution of income and wealth. Yet one of the most economically significant investments in the next generation remains almost entirely invisible in those measures: the nutrition and care provided through breastfeeding.

Current national accounting rules record spending on commercial infant formula as part of economic production and growth. However, when mothers produce food through breastfeeding, neither the food itself nor much of the associated care work appears in conventional economic statistics. Given research has shown that breastfeeding contributes to improved health, educational attainment and later-life economic outcomes, the result is a paradox: a shift from breastfeeding to commercial milk formula increases measured GDP even though it may leave child welfare potentially worse off.

In a new Austaxpolicy article, Dr Julie Patricia Smith argues that this creates a blind spot in how we understand inequality, human capital formation, and economic well-being. The paper explores how integrating the ~35.6 billion litres of human milk produced annually by breastfeeding mothers into the Food and Agricultural Organization’s (FAO) Food Balance Sheets can be used to construct distributional accounts that measure access to human milk across income and wealth groups.

Although an unusual topic for economists, the broader policy implications are profound: when unpaid household production is invisible, investments that support it can be systematically undervalued, affecting areas ranging from parental leave and workplace policy to preventive health investments and gender equality initiatives.

To find out how to 'make the invisible visible', read more at:
https://www.austaxpolicy.com/beyond-gdp-why-measuring-child-health-equity-should-matter-to-economic-policy/

When governments debate economic progress, inequality, or fiscal sustainability, they typically rely on evidence derived from national accounts, GDP, and taxation statistics used to measure… Read More ›

01/10/2026

What happens when two people earn the same income but face very different tax bills? In their new research, Pierre Bachas, Christopher Hoy, Anders Jensen and Mahvish Shaukat examine tax fairness between employees and the self-employed across 29 lower-income countries. The article explores why these differences arise, how they shape perceptions of fairness, and what they mean for the design of fairer tax systems. Read more here 👇

New evidence from 29 lower-income countries examines tax fairness between employees and the self-employed, and how unequal tax burdens shape views on tax reform.

23/09/2026

It’s often argued that Canada's income tax system is overly complex. But is it really causing more "tax pain" for the average filer?

In a new article for Austaxpolicy, François Vaillancourt (Université de Montréal & CIRANO) unpacks an interesting divergence:

The federal income tax code's complexity has increased five-fold over the past 50 years.

However, the time and financial costs for individuals to file their taxes have actually plummeted since 1985.

The widespread use of tax software and downloadable tax slips has completely changed the compliance landscape.

Because the overall "tax pain" index has remained low, political parties have largely ignored calls from tax professionals for system simplification. Could the same trend be true for Australia?

Read the full analysis here:

In this article, Francois Vaillancourt examines the divergence between tax complexity and compliance costs in Canada

09/09/2026

How user-friendly is South Africa’s VAT Act?

A new empirical study by Muneer Hassan finds that its current structure makes ordinary VAT transactions unnecessarily difficult to navigate.

The problem is not the complexity inherent in VAT itself. Rather, difficulty is caused by “legal complexity" — the way legislation is structured and organised.

For example, registration only comes up in section 23, but the underlying basis for determining who must register for VAT is situated much earlier, in section 15. As a result, various and consecutive sections read as if they’d been “hastily assembled”.

Hassan proposes reorganising the Act around the lifecycle of a VAT vendor: from registration, to charging output tax, claiming input tax, submitting returns and ultimately deregistering.

However, rewriting a whole Act from scratch is a major undertaking, requiring new wording and new policy trade-offs, buy-in from multiple stakeholders and ratification in the legislature as well as updated practices.

Hassan thus suggests a descriptive framework that simply regroups and reorders the existing content.

Read more:

Imagine you’re a South African business importing “electronic services” such as cloud software, an online subscription, or a digital download from overseas. Figuring out your… Read More ›

07/09/2026

How far does Australia’s GST extend into its coastal seas?

Knowledge of the precise geographical limits of Australia’s primary indirect tax laws – being GST and transfer duties – is of critical importance to the many taxpayers who carry on activities in the country’s coastal seas.

However, a 2015 change to the GST Act appears to have unintentionally excluded the outer 9 nautical miles of Australia’s territorial sea from GST by replacing "Australia" with “indirect tax zone”.

In making this change in terminology, it appears not to have been the intention of the Federal Parliament to alter in any way the legal reach of the GST. However, the new definition did in fact change the geographical reach of the GST, and in a material way.

In their new piece on Austaxpolicy, Aleks Zochowski and Peter McMahon argue that amending legislation, made retrospective to 1 July 2015, ought to be introduced as soon as possible to rectify the position, and to dispel any uncertainty as to the proper GST treatment of activities carried out in Australia’s coastal seas.

Otherwise, the GST may be at risk of missing its intended mark – that of taxing supplies made in Australia, and within the full breath of its surrounding 12 nautical mile territorial sea.

Read more: https://www.austaxpolicy.com/the-operation-of-gst-and-transfer-duty-laws-in-australias-coastal-seas/

Australia’s GST and transfer duty laws do not apply across the full territorial sea. This article examines the subsequent legal implications.

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132 Lennox Crossing
Canberra, ACT
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Telephone

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Website

https://taxpolicy.crawford.anu.edu.au/

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