Study finds tax benefits delay births and deaths
Studies by two Australian economists have found the possibility of saving money to be sufficient cause for the rich to in effect delay their deaths and expectant mothers their date of delivery.
The findings were made by Andrew Leigh, of the Australian National University, and Joshua Gans, of the Melbourne Business School, in two separate studies: “Did the Death of Australian Inheritance Taxes Affect Deaths?” and “Born on the First of July”.
In the former study, the two researchers found that five in every nine rich people were able to effectively delay their deaths to benefit from the abolition of federal inheritance tax from midnight July 1, 1979.
Leigh and Gans found that these people, statistically, should have expired in the last week of June in that year, but did not do so until the first week of July, enabling their estate to benefit from the new tax regime.
Rich people dying before the deadline were to be taxed at up to 28 per cent of the value of their estates, while those who survived into the new financial year were not taxed at death.
In an interesting footnote, the economists conceded that relatives might have concealed relatives’ bodies until the new financial year in an effort to meet the new deadline.
In the second study, “Born of the First of July”, the researchers found that the births of more than 1,000 babies were effectively held back until after midnight on July 1, 2004, allowing parents to claim the $3,000 baby bonus.
The study pointed to Australian Bureau of Statistics (ABS) data on births for 2004, which showed 490 babies were delivered on June 30, when the babies’ parents received no bonus, representing one of the quietest delivery days that year.
On July 1, however, the first day of the $3,000 bonus, the number of births doubled to 978, making it the busiest birth day in 30 years of ABS birth statistics. There were a further 902 births the next day, July 2, making it the seventh most popular delivery day in the past three decades.
The study has raised the spectre of a similar birth ratio occurring at the end of this financial year, June 30, when the baby bonus increases by $1,000 to $4,000.
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
