Australia's Future Tax System

Architecture of Australia's tax and transfer system

11.6 A cycle of complexity

Many of the sources of complexity outlined above operate in a systemic manner to increase the complexity and compliance costs of the tax‑transfer system over time. As complexity and compliance costs increase, their impacts become more evident to taxpayers and transfer recipients leading to calls to simplify the system.

Following reform (or even during the reform process) these sources of complexity will begin to undermine any gains to simplicity. This 'cycle' of complexity is consistent with the observed pressure to increase the complexity of the tax‑transfer system, particularly through the income maximising behaviour of individuals, interspersed by periodic calls by taxpayers and transfer recipients for fundamental simplification (Chart 11.4).

Chart 11.4: A cycle of complexity

Chart 11.4: A cycle of complexity