JAT Volume 19 Issue 3 – Killaly

Sometimes as an editor you receive a contribution that challenges you and the way you see the world. Jim Killaly’s ‘Fair Game’ does that. It is a ground-breaking work, distilled from 40 years of administering and thinking about the tax system and the deeper drivers that underpin the very human actions and interactions in this area.

Killaly spent 46 years in the Australian Tax Office. He was a well-respected and, for some taxpayers and non-taxpayers, a feared Deputy Commissioner. It is the lived experience of tax administration that has inspired Jim to write this analysis. As a tax researcher, the search for deeper meaning and understanding is one I am familiar with
too and there is so much in this work that provokes and challenges the old ways of viewing tax and thinking about it.

Killaly uses a systemic framework analysis to give a deeper level of understanding, from the big picture down to specific cases. This framework is made up of the “Iceberg Model”, mapping of the economic value chains of multinational groups, economic functional analysis and productivity analysis. His aim, as he says in the overview, is ‘… to show that for each of these levels and contexts the framework enables policymakers, tax administrators and tax professionals to better understand and manage the complexity of issues that are arising.’ Killaly concentrates on companies and tax, in particular cross-border situations, to explore the complexity of arrangements and potential resolution of the problems that arise. The identification of underlying movements coming out of this more systemic approach gives us the basic tools to do that. As he says:

The proposed methodology includes a distillation of the patterns and trends in the stocks and flows
of transactions and events (and the patterns and trends in relation to the absence of desirable
transactions, stocks, flows and events) for deeper analysis of the underlying causes and their

The approach involves understanding that tax is part of a wider system that includes competitive markets, the global economy, the Australian economy and its performance, the growing oligopolisation of capital, the impact of companies as groups both within Australia and across the globe, and how the Australian company tax system operates both on paper and in practice. Part of Killaly’s work involves applying his framework in specific situations such as corporate financing and transfer pricing. Not only that but the former Deputy Commissioner uses the framework to examine and judge the ATO’s administration of the 1,400 major economic groups. As to determining appropriate policy, administration or other actions in an ever changing world, Killaly says:

The analysis takes for granted that Australia will need to be responsive to emerging strategic issues
on an ongoing basis. However, it explores whether the use of the systemic analysis tools in
policymaking and tax administration might allow Australia to complement this responsiveness with a
forward-looking approach that makes public policy more effective and sustainable.

I strongly recommend ‘Fair Game’ to all our readers.

John Passant, co-editor, the Journal of Australian Taxation, and former ATO colleague of Jim Killaly.


Volume 19, Issue 2 – Barrett


By Jonathan Barrett


Treaties on environmental sustainability are concluded between nation states but, faced with the domestic political realities of taxing or otherwise acting against the short-term interests of voters, national governments often engage unwillingly with their international obligations. The Trump administration’s resiling from the Paris Agreement on climate change is an egregious example of flouting of national obligations but Australia and New Zealand have also been slow to give effect to their promises to reduce carbon omissions. Conversely, political subdivisions, including cities, can make their own distinct contributions to sustainability through various measures, including taxes. Megacities, such as London and Sydney, are sufficiently large to have the potential to engage with climate change in ways comparable to many countries. Smaller cities, including Auckland and Brisbane, can also make a contribution to sustainability. Focusing on the use of subnational taxes, this article considers whether, in practice, they do.


Volume 19, Issue 2 – Freudenberg, Brimble and Belle Isle

Tax Literacy of Australian Small Businesses

By Brett Freudenberg, Toni Chardon, Mark Brimble and Melissa Belle Isle


Small businesses are a critical component of economies, although they face a myriad of issues, including their literacy in relation to a number of key business issues. In recent years tax literacy has been argued as an important part of financial literacy. Research has demonstrated that a person’s tax literacy is likely to be greater when they are self-employed and operate their own businesses. However, whether this increased tax literacy is sufficient to address the labyrinth of issues faced when running a business is questionable. This article reports further evidence about the tax literacy of Australians who have conducted a business in relation to GST, deductions and their compliance attitude. These findings can build the foundation for future work to explore how tax literacy is an important component of financial literacy for small businesses.