PERSONAL INCOME-TAX DEDUCTIONS IN AUSTRALIA, 1978 79-1990/91/

An analysis of deductions claimed against personal income tax in Austr alia over the period 1978/79-1990/91 indicates that the level of claim s is positively related to both the marginal tax rate facing the taxpa yer and to the taxpayer's net income. However, only a small part of th e large increase in deductions claimed can be explained by these facto rs. An exogenous trend indicates an increased 'taste' for deductions. Evidence for this is a high correlation between deductions claimed and the proportion of taxpayers who submit their returns via a tax agent.