The Australian Tax Planning Playbook: Volume 1, Tax and Transfer Policy Institute (TTPI) Working Paper No. 1/2020

By Tristram Sainsbury and Robert Breunig


Has income tax become voluntary in Australia? It appears that for some, nil or very low tax bills are a very real prospect. Those with flexibility over how they earn income can use a range of legal means of ‘tax arbitrage’ to pay a lower marginal tax rate. Those highly motivated to achieve the lowest possible tax bill can structure their financial affairs so as to stream income through a mix of companies, trusts, property assets, superannuation funds and adult family members over time. This paper presents some of the simpler strategies that are part of the ‘Tax Planning Playbook’. In doing so, it shows how tax planning is available to people across the income distribution. It is not surprising that taxpayers make use of the opportunities available to them and respond to the incentives they face. However, a system that encourages tax planning is an affront to the commonly-held core principles of good tax design of fairness, efficiency and simplicity. It also raises questions about the longer-term sustainability of Australia’s tax system. Addressing tax planning requires a wholesale rethink about the design and role of income in Australia’s tax system.

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