Government cracks down on tax avoidance through foreign investment rules

The Turnbull Government announced yet another measure aimed at addressing tax base erosion and profit shifting, placing additional requirements on new foreign investment under the existing national interest test. In the last 12 months Australia has seen various reforms within the tax system. However, this latest initiative is a shift as it links Australia’s tax regime with its foreign investment regime. It sends a broader signal to the market that Australia will look beyond the collection of tax revenues to a consideration of national interest.

Assessing taxpayer response to legislative changes: A case study of ‘in-house’ fringe benefits rules

On 22 October 2012, the Australian Federal Government announced the removal of the $1,000 in-house fringe benefits concession when used as part of a salary packaging arrangement. At the time of the announcement, the Federal Government predicted that the removal of the concession would contribute additional tax revenue of $445 million over the following four years as well as an increase of GST payments to the States and Territories. However, anecdotal evidence at the same time indicated that the Australian employer response was to immediately stop providing employees with such in-house fringe benefits via salary sacrificing arrangements. Data presented in this article, collected from a combination of interviews with tax managers of four Australian entities as well as a review of the published archival data, confirms that the abolition of the $1,000 in-house fringe benefits concession was perceived as a negative change, whereby employees were considered the ‘big losers’ despite assertions by the Federal Government to the contrary. Using a conceptual map of tax rule change developed by Oats and Sadler, this article seeks to understand the reasons for this fringe benefits tax change and taxpayer response. In particular, the economic and political factors, and the responses of the relevant taxpayers (employers) are explored. Drawing on behavioural economic concepts, the actions, attitudes and response of employers to the rule change are also examined. The research findings suggest that the decision by Australian employers to cease providing the in-house fringe benefits as part of a salary-packaging arrangement after the legislative amendment was impacted by more than simple rational behaviour.

Reducing tariffs according to WTO accession rules: The case of Vietnam

When Vietnam joined the World Trade Organization (WTO) in 2007 it was granted an accession period up to 2014. During this period tariffs would have to fall according to the accession agreement. This paper evaluates this 2007–2014 trade liberalization by building an applied general equilibrium model and calibrating it to the Vietnamese data. The model pays careful attention to the fact that Vietnam has many state-owned enterprises. The model simulations show that the WTO tariff reductions will reduce overall welfare. Moreover, the biggest loss will take place among the poor rural households in Vietnam. This paper proposes other tariff reforms that will both raise overall welfare and reduce income inequality.

Transfer pricing rules and competing governments

The literature on the regulation of multinationals' transfer prices has not considered the possibility that governments may use transfer pricing rules strategically when they compete with other governments. The present paper analyses this case and shows that, even in the absence of agency considerations, a non‐cooperative equilibrium is characterised by above‐optimal levels of effective taxation. We then derive conditions under which harmonization of transfer pricing rules lead to a Pareto improvement, and show that harmonization according to the ‘arm's length’ principle—the form of harmonization advocated by the OECD—may not be Pareto improving.

Spectral Values

This series of drawings takes a diagrammatically creative approach to understanding the economic theories and personalities at the centre of the Global Financial Crisis. Mimicking the form of US currency, the work removes labels from common economic diagrams and portrays financial titans in repose as a way to express a personal and ambivalent experience of contemporary capitalism.

Spectral unmixing with estimated adaptive endmember index using Extended Support Vector Machine

The most difficult operation in the flood inundation mapping using optical flood images is to separate fully inundated areas from the ‘wet’ areas where trees and houses are partly covered by water. This can be referred as a typical problem the presence of mixed pixels in the images. A number of automatic information extraction image classification algorithms have been developed over the years for flood mapping using optical remote sensing images. Most classification algorithms generally, help in selecting a pixel in a particular class label with the greatest likelihood. However, these hard classification methods often fail to generate a reliable flood inundation mapping because the presence of mixed pixels in the images. To solve the mixed pixel problem advanced image processing techniques are adopted and Linear Spectral unmixing method is one of the most popular soft classification technique used for mixed pixel analysis. The good performance of linear spectral unmixing depends on two important issues, those are, the method of selecting endmembers and the method to model the endmembers for unmixing. This paper presents an improvement in the adaptive selection of endmember subset for each pixel in spectral unmixing method for reliable flood mapping. Using a fixed set of endmembers for spectral unmixing all pixels in an entire image might cause over estimation of the endmember spectra residing in a mixed pixel and hence cause reducing the performance level of spectral unmixing. Compared to this, application of estimated adaptive subset of endmembers for each pixel can decrease the residual error in unmixing results and provide a reliable output. In this current paper, it has also been proved that this proposed method can improve the accuracy of conventional linear unmixing methods and also easy to apply. Three different linear spectral unmixing methods were applied to test the improvement in unmixing results. Experiments were conducted in three different sets of Landsat-5 TM images of three different flood events in Australia to examine the method on different flooding conditions and achieved satisfactory outcomes in flood mapping.