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  • Cost of taxation compliance

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    This chapter provides information on the time-based cost of compliance data, as reported on the major tax forms used by individuals and businesses. This includes the income tax returns for individuals, companies, trusts and partnerships; BASs (quarterly only) and the fringe benefits tax return. Data is extracted from the time-box label that is included on these forms. Taxpayers may use the time-box to record their estimate of the total time to complete the form in addition to the time required for the compilation of relevant information and record keeping.

    The time-box label was introduced in the late 1990s and was placed on all government forms that businesses were required to complete. Recently, this mandatory element was removed, although key forms such as the BAS and tax returns continue to use the time-box label.

    There are two time-box labels:

    • for simple forms, the label asks taxpayers to estimate the time taken to complete the form (in hours)
    • for complex forms, the label asks people to estimate the time taken to prepare for and complete the form (this label is used on the BAS and income tax return forms).

    It is not compulsory for taxpayers to complete the time-box. As a result, the percentage of forms with this label completed is generally low. For example, the BAS forms generally have a completion percentage from 25% to 33%, but some forms have a much lower rate than this - between 5% and 10%.

    OVERVIEW

    For the 2007-08 income year:

    • the average time taken to complete a business income tax return was 5.9 hours
    • the average time taken to complete a Business activity statement (BAS) was 2.0 hours
    • it took an average of 12.1 hours to complete a fringe benefits tax return
    • the average cost of managing tax affairs claimed by an individual was $301.34.
     
      Last modified: 24 Mar 2010QC 22511