The Differential Effects of Recent Chances in Income Tax Legislation on Primary Producers and Other Businessmen

In recent years a number of significant changes have been made in Australian income tax legislation in regard to the treatment of non-business expenditure. The relative effects of these changes on primary producers and other taxpayers operating unincorporated business rirms are dirficult to ascertain. The complexity of the taxation system together with the fact thai changes to taxation laws have different effects depending on the level and variability of incomes make generalizations difficult. Research designed to compare average rates of tax on a large number ofsimulaled income series suggests that earlier income tax advantages enjoyed by primary producers relative to other businessmen with equally unstable incomes have now been largely e1iminaled. Furthemore, it now appears that primary producers with highly fluctuating incomes may pay substantially greater tax than other businessmen with stable incomcs inspite of the use of averaging procedures. The recent changes to the tax laws regarding items of personal expenditure, therefore, have significantly reduced the benefits of averaging previously available to primary producer taxpayers. © 1976 Economic Society of Australia (Queensland) Inc. All rights reserved