Commissioner of Taxation Annual Report 2009-10

1920-1929

Australia's population in 1920: 5,411,000

The early 1920s were characterised by Australia's experience of war and a nation in recovery. Returning service men re-entered the workforce and Australia entered the 'new age' with innovations such as radio broadcasting and motor cars becoming increasingly widespread. During the decade there was a rise in migration, especially from Great Britain and Southern Europe. The decade ended with the stock market crash on Wall Street in New York that plunged the world into the Great Depression (1929-34).

Events of the decade

• Following the Peace Conference in Paris, the League of Nations was formed on 10 January 1920.
• In 1921 Edith Cowan became the first woman elected to a state parliament (Western Australia). Voting in Australian federal elections became compulsory on 17 July 1924.
• Aviation developed quickly during the decade. In 1927 Charles Lindbergh completed the first solo transatlantic flight from New York to Paris. A year later, Australian airman Bert Hinkler flew from Britain to Australia and Charles Kingsford Smith flew from America to Australia.
• Advancements in technology included the introduction of radio broadcasting in 1923 and the first transatlantic telephone call between New York and London on 7 January 1927.
• In 1925 the Assisted Migration Scheme between Australia and Britain was established to provide approximately 450,000 migrants over ten years.
• On 9 May 1927 the tenth Parliament was convened in Canberra, finalising the move to Australia's new national capital.

Significant tax events

For the first decade following federation, the Australian Government's tax revenue was restricted to customs and excise duties. As it became clear that this was insufficient to implement government policies, federal income tax was introduced in 1915 and the question of tax harmonisation between the Commonwealth and the states was brought to the fore. The early part of the decade saw work begin across a number of fronts to achieve greater accord, but by the end of the 1920s tax uniformity had yet to be realised.

• By 1920, income tax had been in existence long enough to reveal anomalies, inadequacies, inequities and administrative difficulties arising from its legislative structure.
• In September 1920 the Australian Government appointed a Royal Commission on Taxation as a result of concerns about the 'equitable distribution of the burdens of taxation' and the 'harmonisation of Commonwealth and state taxation'. A significant recommendation in the final report (published 1923) was that the Commonwealth would raise income tax with the states left to raise indirect taxes, but neither authorities agreed with this recommendation.
• Administrative difficulties that had arisen from the co-existence of Commonwealth and state tax authorities were, in part, resolved by a merger which began in 1921 and was completed in January 1924. This facilitated the assessment of Commonwealth and state returns by a single administration.
• An amendment to the income tax legislation in 1925 established the Board of Review to resolve taxpayer appeals against ATO assessments.
• As more Australians travelled overseas, a tax clearance certificate had to be obtained from the ATO before a passport was issued. This was in response to both citizens and visitors leaving the country without first meeting their tax obligations.

Snapshot of the ATO in the 1920s

• Manual processing of paper tax returns was the major function of the ATO during the 1920s. Temporary staff were employed to undertake the routine work during peak periods which became known as 'tax time'.
• During the decade the ATO collected approximately £15 million annually, significantly less than state tax revenue of about £32 million and Commonwealth customs and excise revenue of around £43 million annually.
• Nearly one million income tax returns were processed in 1920-1921. Land tax contributed about £3 million annually and income tax about £9.8 million annually by the end of the decade.
• With the growth in employment of permanent staff during the decade a lively ATO social culture began to emerge. However, due to war casualties there was a shortage of experienced and skilled officers at the beginning of the decade.
• Women remained a permanent part of the workforce when the war ended and servicemen returned to work. Although public service policy required women to resign upon marriage, the number of women employed during the period increased from 12 to 300.
• Robert Ewing continued as the Commissioner of Taxation throughout the decade and reflected that he wanted a workforce that would 'assist taxpayers in every possible way'.
• Commissioner Ewing and his staff helped draft the 28 amendments to the various tax acts passed by Parliament during the decade.
• During his long tenure in office, Commissioner Ewing oversaw the implementation of Commonwealth income tax, sales tax and wartime tax measures. He also initiated the publication of rulings in 1923.

Sections within Our centenary

• Setting the scene: Before 1910
• 1910-1919
• 1920-1929
• 1930-1939
• 1940-1949
• 1950-1959
• 1960-1969
• 1970-1979
• 1980-1989
• 1990-1999
• 2000-2009