Teacher & Crest

ELRI has concluded an engagement by the Queensland Government through Queensland Treasury to write training modules for the Office of State Revenue.

The modules covered:

Payroll Tax
  • Contractors
  • Grouping Formation
  • Grouping Exclusions
  • Grouping Consequences
Land Tax
  • Introduction
  • Proper Taxpayer
  • Companies, Absentees and Trusts
  • Exemptions
  • Corporate Reconstructions
  • Business Assets
  • Trusts
  • Partnerships
  • Public Unit Trusts
  • Landholder Duty
Legal Personalities and Relationships
  • Legal entities and legal relationships
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Confused About TaxFederalism is no doubt a wonderful thing in many respects except, that is, when it generates a complex web of State and Territory taxes which serve no useful purpose beyond enabling States and Territories to engage in some sort of fiscal competition, a sort of “mine is smaller than yours” mentality, while playing lip service to co-operation.

Consistent with its aims and areas of research, ELRI has identified two major problems in Australia’s tax system:

  • the lack of standardisation of State and Territories tax laws; and
  • the lack of a central administration of those laws.

These problems are:

  • adding to the costs of doing business in Australia;
  • making Australia less attractive to overseas investors;
  • affecting Australia’s international competitiveness in trade;
  • adversely affecting Australia’s GDP;
  • undermining budget efficiencies for the States and Territories.

The solution lies in:

  • implementing the formation of an entity similar to the Multistate Tax Commission (MTC) in the US to achieve a co-operative, shared responsibility for the administration of those taxes, particularly a one stop shop system;
  • move to standard tax legislation under the guidance of that new entity.
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In November 2013, James Stokes presented a paper to the Queensland Law Society Elder and Succession Law Conference, which outlines the looming crisis for Australia’s Aged Care provision.

James co-presented as a panel with McCullough Robertson’s Tim Longwill supported by a paper prepared by ELRI’s Professor John Mangan.

Aged CareThe Economics and Law Research Institute (ELRI) is currently researching issues relating to an ageing population from a law and economic perspective. Legal issues will be paramount in fashioning the environment in which age related topics such as retirement, aged care and inter-generational transfer of assets will take place; but these legislative requirements will also have significant economic outcomes in terms of public finance, equity, and the role of private capital in aged care provision.

Aged care in Australia is paid for through a combination of public and private funding. Government has been the primary provider of aged care by subsidising residential care and community care packages, contributing, on average, two-thirds of aged-care costs. The remainder is privately financed by older Australians and charities.

Australia’s ageing population presents the challenge of an increasing and changing demand for aged care services.

By 2050 the Australian Government will need to quadruple its aged-care expenditure to $41 billion to simply maintain its current level of service provision.

Consequently a shift to family-based care is seen as a necessary option in alleviating the burden on government to provide aged care services in the long term. Changes to the law, particularly those of a commercial nature or those related to inheritance and succession, have profound economic impacts between law makers and the often profound economic changes they help initiate, both implicitly and explicitly.

This is not to argue that laws should be drawn up purely on economic grounds to exclusion of principles of social welfare and equity. However, laws often have unintended economic consequences, which, if properly understood would lead to a modification in either the drafting or the enforcement of the law.

Download PDF: QLS Elder & Succession Law Conference Paper

New Tax LawsELRI is concerned to take a leading role in this topic. There has been a more clear recognition over the last few years of the importance and the skills required for optimal tax design and drafting.

To this end, ELRI is opening up discussions with the people involved both at State and Commonwealth level, such as Commonwealth Treasury, Queensland Office of Parliamentary Counsel, other State/Territory and OPC counterparts to identify current drafting principles, other available approaches open here and internationally and to try to measure their respective effectiveness.

A levy on Aged Care?

One inescapable truth of the near future is that the world, and in particular Australia, will have a much higher population of elderly people. As things stand, the government’s aged care contribution is a fraction of what will be required in 25 to 30 years time.

ELRI has developed a collection of insights into public and private funding options for aged care. Some of the options that are available include:

  • An aged care levy
  • Tax deduction vs. rebate
  • Filial responsibility laws
  • FBT
  • Return of death taxes

The strategy document discusses possibilities such as an Aged Care Levy Surcharge (ACLS) in which each child  earning over $100,000 household income would be required to pay an ACLS of 1.5% where they have a parent in subsidised care, although this could provide little disincentive to go entirely private.

Also discussed is the median household net worth of Australians over 75 years of age which is estimated at $450,000. Does this open up the potential for death taxes?

Showing an interesting comparison of these and other likely solutions, the one unavoidable fact is that in future, some private funding will be obligatory.

Download PDF: ITOW Affording Retirement

As part of its Intergenerational Transfer of Wealth and Ageing Population project, the Economics and Law Research Institute is investigating the rise in abuse of Enduring Powers of Attorney.

EPA Abuse News StoryInstead of waiting for funds to be distributed after a person’s death, Powers of Attorney are frequently used by children all over Australia to rip off their elderly relatives by pressuring them into signing over their assets or cash.


This is leaving many elderly people destitute and because most cases are perpetrated by close family members, the majority of incidents go unreported.

The scale of this abuse is significant and growing:

  • Most victims aged 75+;
  • Number of referrals ­‐ 792 (2009); 863 (2010); 1029 (2011);
  • Most victims on pensions (74%);
  • Self‐funded (16.3%); Value of assets abused $108.7M (2011).

ELRI’s aim is to understand the value of assets held by people over 65 in Australia and to assess the value of those resources that are under threat from EPA abuse.

Understanding the effect this abuse has on the asset transfer risk to the elderly in Australia and the wider community will enable consideration of the current legal framework governing EPAs.

The final findings of this investigation will enable the shaping of fresh legislation to prevent or significantly reduce this type of abuse and enable transfer of wealth to take place without any detrimental effect on the Australian economy.

Possible outcomes:

  • Change in the law.
  • More education/assistance.
  • Necessity to avoid “heavy handedness” to deprive EPAs of their utility.
Download PDF: STEP Queensland Enduring Powers of Attorney


Mining and petroleum exploration practice

Enquiries have suggested that the distinction drawn in the Consultation Paper between a mineral farm-in agreement and a petroleum farm-in agreement based on the timing of the transfer of the exploration authority may not always be the case. Depending on the drafting of the proposed amendments to the Act, this may not be a significant issue.

Mechanics of the exemption

The proposed exemption works by carving out exploration or development expenditure (“the exploration amount”) from the calculation of the dutiable value which is to be determined “… by reference only to the consideration under the agreement.” This means that there are two amounts to be identified:

  • consideration; and
  • exploration amount.


Consideration under the Act is not defined: see Duties Legislation Queensland, JG Mann (Thomson Law Book Co, 2002), paragraphs [2.2710] et seq. The principles stated by the High Court in Chief Commissioner of State Revenue (NSW) v. Dick Smith Electronics Pty Ltd (2005) 221 CLR 496 at [72] is generally accepted as stating the current principles. The point is that what is the consideration for a transfer may sometimes be difficult to identify. This issue of course equally applies to agreements other than farm-ins. But is there an issue with this proposal if the consideration can’t be identified or quantified or there is none? ls it only intended to ignore the value of the exploration permit if the consideration can be determined? Or, is the value of the exploration authority always to be ignored so that, in the example, the $300,000 is never subject to review? ln practice, this may well not be an issue but it may be relevant to the drafting of the proposed amendments.

One question arising from the example is whether section 10 of the Act is effectively being amended by imposing duty in relation to mining information. lt could be argued that the $200,000 being paid for the mining information in that example is quite separate from the consideration being paid for the interest in the exploration permit. It is unlikely that this is a policy change but it may be viewed that way and if so, then there may be calls for separate consultation to fully consider the implications for the mining and petroleum industries and other sectors across the range of transactions which are commonly effected so as to ensure consistency of approach.

Exploration amount

The definition of that expression in the consultation Paper may need some further consideration. At the moment, it is “… an amount specified in a farm-in agreement to be expended … on either or both exploration and development of the exploration authority …” Questions may arise as to just what this is to cover, how connected to the project those costs have to be and what evidence may be required. It may be questioned whether the expression “… exploration activity in the permit area” in the example is to have a simple geographic meaning. For example, although drilling costs and feasibility costs are no doubt to be included and it may be expected that a number of consultants fees directly related to the project should come into contention, such things as director’s fees, insurance and fees associated with the formation of entities or documentation and the like may not. But then again, are (e.g.) costs associated with employees (travel costs, vehicle costs, equipment hire and leasing costs, independent contractors costs for work done, taxes and permits payable to government etc.) directly connected with the exploration activity included? This issue may already have been discussed with industry but if not, then further consultation and consideration of their responses may be necessary.


The definition of “Exploration amount” and the example assume that there is an apportionment actually set out in the agreement. That may not always be the case. If so, is it intended that the parties be permitted to supply that after the agreement and if so, what details and evidence would be required?

Anti-avoidance provisions

The policy no doubt intended in this part of the Consultation Paper would find no objection from industry. The limitations on the operation of Chapter 11 of the Act set out in section 432 are a sensible recognition of the way in which anti-avoidance provisions must operate if confusion in the minds of taxpayers is not to occur. It is heartening to see that Queensland is ahead of many other jurisdictions in its practical, commercial approach to this vexed issue. This approach is also consistent with recent developments in the United Kingdom. The anti-avoidance section proposed must therefore be drafted to reflect these principles.

Transitional arrangements

There may be an issue as to whether these arrangements need to take into account any transfer occurring after the start time pursuant to an agreement, perhaps an option, entered before the start time.


This Institute would be delighted to provide further comment on the final policy proposal and would be delighted to assist in drafting and/or reviewing the proposed amendments to the Act.

Economic impact

This Institute has not had the time to consider the economic impact of these proposals but would be delighted to do so if requested.