Chapter 24 discusses the debate on whether more spending on education increases student learning and other student outcomes, such as graduation rates (attainment). Most of the debate has centered on increases in spending for a given year of schooling and how much learning does or does not increase in each year of schooling with increases in spending per pupil. The chapter focuses on the spending-student achievement/attainment relation as a financial issue, and reviews the empirical arguments and counter-arguments (and the methodologies used to back them) for whether spending more per pupil – especially in districts and schools serving lower social class students – contributes significantly to student outcomes. After presenting the correlational (between more spending and higher achievement, usually using international comparison) arguments of impact of more spending that have, until recently, dominated the debate, the chapter reviews recent causal analyses in the United States, Israel, and Chile that evaluate exogenous increases in spending per pupil on lower-income students and show positive effects on achievement gains over time.

Australia’s income tax legislation has always contained some form of general anti-avoidance rule. Australia’s general anti-avoidance provisions are located in pt IVA ITAA36. Part IVA replaced the former general anti-avoidance provision contained in s 260 ITAA36, which applied to arrangements that were made or entered into up to 27 May 1981. Part IVA applies to ‘schemes’ entered into after that date. Part IVA is a complex statutory regime that consists of a number of interconnected provisions. The provisions have been amended on several occasions over the years and currently comprise ss 177A to 177R. This chapter discusses the background to the introduction of pt IVA and focuses on the operation of its core provisions. It is important to be aware that significant amendments to pt IVA were introduced by Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013 (Cth). These amendments were designed to address certain weaknesses in the provisions that had been identified in various cases. They apply to schemes other than those that were entered into, or commenced to be carried out, before 16 November 2012.

Taxation is an ancient and ubiquitous concept that forms one of the central pillars around which civilisation has been built. Taxation plays a critical role in society and has the capacity to affect the lives of everyone within it. History vividly highlights that, while taxation has brought great prosperity to nations, it has also fuelled bitter conflicts. Taxation can invoke passionate emotions in people about their rights and obligations and is a topic on which rational people often have diametrically opposed views. Ultimately, taxation is a powerful instrument that governments use to fund their activities and shape their economies. Without it, they would not be able to survive. While the features of taxation have evolved considerably over the years, taxation remains a fundamental characteristic of the modern nation state and an integral part of the overarching architecture that lies behind the economic systems of every developed country in the world. Its inescapable and pervasive nature was recognised long ago by Benjamin Franklin, who famously wrote: ‘In this world nothing can be said to be certain but death and taxes’.

This chapter discusses a range of miscellaneous matters relating to the administration of the tax system. In particular, it focuses on the special rules relating to record-keeping, activity statements, single touch payroll reporting, running balance accounts, taxable payments reporting and the recovery of tax. It also examines the special interest payment regimes that exist under the tax system. The tax laws contain important rules requiring taxpayers to retain written records about their tax affairs. Records in English (or that are readily convertible into English) must be kept for specified periods of time (typically five years) so that the ATO has the opportunity to inspect those records if it conducts an audit. Taxpayers that fail to properly keep records may be subject to administrative penalties or may be guilty of committing tax offences.

The tax law contains a number of regimes dealing with financial transactions. These regimes are scattered throughout the ITAA36 and ITAA97 and are either superimposed on, or take precedence over, the general taxation rules discussed elsewhere in this book. The regimes are complex and span many pages of legislation. They contain their own unique terminology and are often targeted at addressing particular kinds of tax avoidance arrangements. This chapter focuses on the following regimes: the taxation of financial arrangements (‘TOFA’) regime in div 230 ITAA97, the hire purchase agreements regime in div 240 ITAA97, the leases of luxury cars regime in div 242 ITAA97, the limited recourse debt regime in div 243 ITAA97, the forgiveness of commercial debts regime in div 245 ITAA97, the capital protected borrowings regime in div 247 ITAA97, the assets put to tax preferred use regime in div 250 ITAA97, the debt and equity regime in div 974 ITAA97, the advance payments regime in sub-div H of div 3 of pt III ITAA36 (ss 82KZL–82KZO), the pre-payment, and deferral and recoupment scheme regime in sub-div D of div 3 of pt III ITAA36 (ss 82KH–82KL), the qualifying securities regime in div 16E of pt III ITAA36 (ss 159GP–159GZ), the traditional securities regime in ss 26BB and 70B ITAA36.

To arrive at their taxable income for an income year, taxpayers subtract their deductions from their assessable income. Most deductions fall within the general deduction provision in s 8-1 ITAA97. Section 8-1 replaces former s 51(1) ITAA36, which was drafted in similar terms, but was rewritten in 1997 as a consequence of the TLIP rewrite. This chapter examines the general deduction provision and the extensive body of case law that has considered it. Section 8-1 has two positive limbs and four negative limbs. This chapter commences with a discussion of the nature of a loss or outgoing followed by a detailed discussion of the positive and negative limbs of s 8-1. The meaning of the term ‘incurred’ and issues relating to the timing of deductions are examined. The chapter then builds on this framework to explore how the general deduction provision has been applied to some common kinds of losses and outgoings. It focuses on clothing, travel, management, self-education, home office, rent and licence fees, interest, legal and trade-tie expenses.

Chapter 17 describes the factors that determine the demand for and supply of teachers, including population growth, class size, the fact that teaching is a feminized profession, highly localized in terms of where individuals who become teachers choose to work, shortages and surpluses of teachers, costs of becoming a teacher, incentives to teach, and the effects of teacher education on both teacher quality and the supply of teachers. The chapter discusses working conditions in schools and the theory of compensating differentials – the reality that teaching conditions vary substantially among schools but that schools with poor working conditions may not be able to offset them with higher teacher salaries, with substantial implications for teacher quality in such schools. The chapter also reviews how teacher quality is defined in the empirical literature on teacher labor markets.

Companies are one of the most common forms of legal entity. They are popular business and investment vehicles and are also used for many other purposes. ASIC’s website indicates that there were 3,241,836 registered companies in Australia as at July 2023. While some of these have only one member, others have many thousands of members. Many large companies are listed on stock exchanges around the world, and their shares are traded daily. At the time of writing, the largest company listed on the Australian Securities Exchange (‘ASX’) was the mining company, BHP Group, which had a market capitalisation of around $230 billion. Companies make up the majority of Australia’s largest taxpayers. Traditionally, Australia has relied heavily on corporate taxation for its tax revenue, and it has one of the highest corporate tax-to-GDP ratios in the OECD. This chapter examines how the tax law applies to companies and their members (eg shareholders). Special taxation rules apply to certain companies, such as PDFs, life insurers, co-operatives, listed investment companies and corporate collective investment vehicles. A separate taxation regime also applies to companies that are members of a consolidated group.

Chapter 8 reviews the major issues of “conditioned choice” and discrimination both in the provision of education and in labor markets. The chapter makes the case that if there are structural relations in society that “condition” individual behavior, access to information, and available likely options for investing in human capital, and if this “conditioning” varies among groups in society, the role of individual “free” choice in investing in academic and productive skills is much more limited, and we need very different explanations for the relationship of education to earnings. Structural limits on choice can come from various sources. Two important instances of such conditioned choice and its possible implications for labor market earnings differences are studied. The first regards gender differences in earnings, and the second, racial differences in earnings. The chapter reviews the arguments by some economists that both gender and race earnings gaps are the result of productivity differences between males and females and Black and White workers, and of other arguments that they are largely the result of discriminatory practices.

Economic, social and cultural (ESC) rights include a number of entitlements, such as the right to work and the enjoyment of just and favourable conditions of work; the right to form and join trade unions; the right to social security; the protection of the family, mothers and children; the right to an adequate standard of living, which includes adequate food, clothing and housing and continuous improvement of living conditions; the right to the highest attainable standard of mental health; the right to education; and the right to participate in cultural life and enjoy the benefits of scientific progress. All these are protected under the International Covenant on Economic, Social and Cultural Rights (ICESCR).

Capital expenditure is not deductible under the general deduction provision in s 8-1 ITAA97 as it falls within the first negative limb of the section. This means that capital expenditure can only be deductible if it satisfies the requirements of a specific deduction provision. This chapter focuses on the ‘capital allowance regime’ in div 40 ITAA97, which allows taxpayers to deduct the cost of ‘depreciating assets’ that are used for a ‘taxable purpose’ over their ‘effective lives’. The regime operates subject to special rules that allow SBEs and certain other entities to claim immediate deductions in particular cases. It also contains ‘balancing adjustment’ rules that apply where taxpayers stop holding depreciating assets and ‘pooling’ rules that allow groups of assets to be written off together as if they were a single asset. There are also special rules that apply to primary producers and miners as well as business-related ‘blackhole’ capital expenditure.

The chapter also examines the ‘capital works regime’ in div 43 ITAA97, which provides deductions for construction expenditure on ‘capital works’ (eg buildings and structural improvements) used for income-producing and other eligible purposes.