Tax Lodgment Methods and Demographics

This assignment examines Australian tax lodgment practices, exploring the relationship between age groups, lodgment methods (tax agents vs. self-lodging), total income, and deduction amounts. It utilizes descriptive statistics, chi-square tests for association, and visual representations like scatter plots and bar charts to analyze the data collected from both a pre-existing dataset and primary research conducted by the student.

Statistics and data analysis
Student Name:
University
23rd January 2018

Table of Contents
Section 1: Introduction....................................................................................................................4
Brief introduction.........................................................................................................................4
Dataset 1.......................................................................................................................................4
Dataset 2.......................................................................................................................................4
Section 2: Lodgment Method – Dataset 1.......................................................................................5
95% confidence intervals.............................................................................................................5
Section 3: Lodgment Method – Dataset 2.......................................................................................6
Graphical Display........................................................................................................................6
95% confidence interval...............................................................................................................7
Section 4: Lodgment Method and Age Group.................................................................................7
Test of association........................................................................................................................8
Section 5: Lodgment Method and Total Income Amount...............................................................9
Section 6: Total Income Amount and Deduction Amount............................................................10
Section 7: Conclusion....................................................................................................................10

List of tables
Table 1: List of five cases of the dataset..........................................................................................4
Table 2: Comparison of lodgment method versus age group..........................................................8
Table 3: Chi-Square Tests...............................................................................................................8
List of figures
Figure 1: Pie chart on lodgment method..........................................................................................5
Figure 2: Pie chart on whether participants would want to use tax agents......................................6
Figure 4: Comparative bar chart of tax lodgment method versus age group...................................7
Figure 5: Average total income amount based on lodgment method..............................................9
Figure 6: A scatter plot of total income amount versus deduction amount...................................10

Section 1: Introduction
Introduction
This study sought to investigate and understand the current behavior of the Australian population
in relation to the tax returns lodgment methods. The citizens can file their tax returns on their
own or they can involve the services of tax agents. So essentially we sought to investigate the
proportion of those who want to engage the tax agents and how much income they have.
Dataset 1
Dataset is a secondary dataset that has five variables in total. The variables are lodgment method,
age group, gender, total deducted amount and lastly total income amount. Tax lodgment method
and gender are nominal variables. Age group on the other hand is an ordinal variable while total
deducted amount and the total income amount are numerical variables
Table 1 gives the first five cases of the dataset.
Table 1: The first 5 cases in dataset 1
Gender Age
Range
Lodgment
Method
Total
Income
Amount
Total
deducted
Amount
Female 9 S 47838 143
Male 10 A 18606 499
Female 7 A 99229 3232
Female 9 S 49815 2035
Male 11 S 17903 0
Dataset 2
Unlike dataset 1, dataset 2 was a primary data that was collected by the researcher himself. This
data had two variables only. The variables included in this dataset are gender and lodgment
method.

Section 2: Lodgment Method – Dataset 1
We first plotted a graph to visualize the lodgment methods. The plot below is a pie chart for the
lodgment method. As can be seen, majority of the people (75.4%, n = 754) would want to lodge
their tax returns through tax agents. Only a quarter of the participants would prefer doing it
alone.
Figure 1: lodgment method (pie chart)
95% confidence intervals
Sample Size: 1000
Observed Proportion: 57%
Confidence Level: 95%
Confidence Interval:
±2.67
Range for the true population proportion:
72.73% to 78.07%

The above results shows that we 95% confident that the sample proportion is between72.73%
and 78.07% for the persons who would use the tax agents in lodging tax returns.
Section 3: Lodgment Method – Dataset 2
Graphical Display
In the plot given below, we observe that using dataset 2 for the primary data collected on the
international students, 53% would want to lodge tax returns on their own while only 47% would
want to go through the tax agents.
Figure 2: Pie chart on whether participants would want to use tax agents
95% confidence interval
Sample Size: 50
Observed Proportion: 68%
Confidence Level: 95%
Confidence Interval:
±17.9%
Range for the true population proportion:
28.8% to 64.5%

From the above results, we are 95% confident that the sample proportion is between 28.8% and
64.5% for the international students who want to use the tax agents to lodge tax returns.
In comparison with dataset 1, we observe that a much lower percent of people are willing to
lodge tax returns by going through the tax agents in dataset 2 as compared to dataset 1.
Section 4: Lodgment Method and Age Group
In this section, we try to investigate the association between age of the person and the tax returns
lodgment method. We present a comparative graph for the same in figure 4 below.
Figure 3: Comparative bar chart of tax lodgment method versus age group
In the figure, we clearly see that there is disparity in the proportion of those who want to lodge
tax returns based on the age of the people. For instance, the older group of people seem to prefer
using tax agents unlike the young group people.
Test of association

In this subsection, we sought to test for the association between lodgment method and the age
group of the participants. The results are in table 2 and 3 below;
Table 2: Comparison of lodgment method versus age group
Lodgment Method
Age Tax Agent Self-Preparer Total
70 and over 49 15 64
65-69 yrs. old 36 10 46
60-64 yrs. old 53 8 61
55-59 yrs. old 65 14 79
50-54 yrs. old 87 19 106
45-49 yrs. old 72 15 87
40-44 yrs. old 81 19 100
35-39 yrs. old 73 23 96
30-34 yrs. old 72 28 100
25-29 yrs. old 78 47 125
20-24 yrs. old 65 33 98
Under 20 23 15 38
Total 754 246 1000
Table 3: Chi-Square Tests
Value df Asymp. Sig. (2-
sided)
Pearson Chi-Square 34.296a 11 .000
Likelihood Ratio 33.772 11 .000
N of Valid Cases 1000
a. 0 cells (0.0%) have expected count less than 5. The minimum
expected count is 9.35.
The p-value of the Chi-Square test of association is 0.000 (a value less than 5% level of
significance), we thus reject the null hypothesis and conclude that there is significant association
between age group and the lodgment method (Corder & Foreman, 2014). The older people prefer
tax agents more than the younger people (Bagdonavicius & Nikulin, 2011).

Section 5: Lodgment Method and Total Income Amount
How does total income amount compare for the two different lodgment methods? This is the
question that this section sought to answer. We present a bar chart comparing the average total
income for the two lodgment methods.
Figure 4: Average total income amount based on lodgment method
The average total income amount for those who lodge tax returns via tax agents is higher than
that of those who self-lodge. This can be seen in figure 5 above.
Section 6: Total Income Amount and Deduction Amount
What is the relationship between total income amount and total deducted amount? This is the
question that this section sought to answer. We present a scatter plot in figure 6 below;

Figure 5: A scatter plot of total income amount versus deduction amount
According to figure 6 above, a positive linear relationship exists between total income amount
and total deducted amount.
Section 7: Conclusion
The aim of this study was to understand the tax lodgment methods and the demographic
characteristics of the different people who lodge tax returns using different methods. Results
showed that majority would prefer to lodge their tax through tax agents (as per dataset 1).
However, based on the primary data that the researcher collected himself, the results showed that
many international students would want to lodge their returns by themselves.
Future research should focus on having participants from different suburbs i.e. stratify the
samples based on suburbs and increase on the sample size. This will help to collect more diverse
views from the participants.
References
Bagdonavicius, V. & Nikulin, M. S., 2011. Chi-squared goodness-of-fit test for right censored
data. The International Journal of Applied Mathematics and Statistics, pp. 30-50.

Burdett, J. & Crossman, J., 2012. Engaging international students: An analysis of the Australian
Universities Quality Agency (AUQA) reports. Quality Assurance in Education. 20(3), pp. 207-
222..
Corder, G. W. & Foreman, D. I., 2014. Nonparametric Statistics: A Step-by-Step Approach.
Corti, L. & Bishop, L., 2005. Strategies in Teaching Secondary Analysis of Qualitative Data.
Harmer, J., Piggott, J., Ridout, H. & Smith, G., 2009. Australia's Future Tax System: Report to
the Treasurer.