Scoping Study of Small Business Tax Compliance Costs


On 4 November 2005 the then Government announced that it had asked the Board of Taxation to undertake a scoping study of tax compliance costs facing the small business sector, and provide a final report to the Treasurer.

The Treasurer’s Press Release announced that the Board would work closely with small business (especially micro business) in undertaking the scoping study. In order to minimise the burden on business, the Board considered there was no need for individuals or organisations that made submissions to the Regulation Taskforce to also make submissions to the Board.

Terms of Reference

In conducting the study, the Board took into account:

  • the purpose and object of the law;
  • the relationship between taxpayer compliance costs and government administration costs;
  • costs incurred by business for non-tax reasons and any additional costs incurred by businesses or their advisors for tax reasons (tax compliance costs);
  • transitional costs and ongoing tax compliance costs;
  • taxpayer circumstances and commercial practices;
  • other legislation; and
  • any other matters the Board considers materially impact on small business tax compliance costs.

In addition, at the agreement of the Government, the Board considered the following recommendation from the Report of the Taskforce on Reducing Regulatory burdens on business (the Regulation Taskforce) in the scoping study:

Recommendation 5.48: Issues for consideration by Board of Taxation

The Board of Taxation considered the following areas in its scoping study of small business compliance costs:

  • the simplified tax system;
  • trust loss provisions and family trust elections;
  • possible benefits of including additional information on activity statements to assist users;
  • ways of reducing the number of PAYG withholding tables; and
  • developing a systematic approach to adjusting thresholds in the tax law.

Consultation and submissions

The Board received a number of written submissions, engaged a consultant to undertake research and prepare a report, and held a series of consultation meetings.

Board Report

On 12 November 2008, the Assistant Treasurer announced  the release of the Board of Taxation’s scoping study of small business tax compliance costs. The release of the scoping study was welcomed by the Chairman of the Board of Taxation, Mr Richard Warburton AO. The scoping study identifies areas where there might be opportunities to reduce compliance costs further.

The study confirms that compliance costs have a proportionately greater impact on smaller businesses than on larger businesses and that these compliance obligations appear to have been growing over time. As the small business sector is a key contributor to growth and employment, reducing small business compliance costs is vital to the Australian economy.

As part of the scoping study, the Board of Taxation commissioned the Australian School of Taxation from the University of New South Wales (Atax) to undertake a qualitative study to identify and describe small business compliance costs (with a particular emphasis on tax compliance costs) and provide a report to the Board.

Further information on the scoping study can be obtained from the Board of Taxation Secretariat on 02 6263 4366 or at