02 May 2024

The Small Model of Australian Representative Taxpayers (SMART) is an analytical tool that allows you to adjust various personal income tax policy settings. The model can be used to estimate the impact of changes to personal income tax settings on the Australian Government budget, as well the distributional impact across taxpayers. The tool can be accessed by clicking 'Launch web application' above.

You should attribute any outputs and analysis undertaken using this tool as "using the Parliamentary Budget Office's analysis tool SMART". The SMART model and its inputs may be used for any purpose but must be attributed to the Parliamentary Budget Office under licence CC BY-SA 4.0 .

The current version of SMART is based on the economic and fiscal parameters underlying the 2023-24 Mid-Year Economic and Fiscal Outlook (MYEFO). It will be updated for the 2024-25 Budget following its release. 

The PBO welcomes feedback from users about their experience using SMART, and suggestions for how it could be enhanced. We're particularly interested in your thoughts about any challenges you encountered using the tool, what you like about it, or ways you think the tool could be improved. Please send your feedback through to feedback@pbo.gov.au.

For further information on how SMART works, or for details on how to request the model code, read our FAQ below.

Frequently asked questions

SMART is hosted by Shinyapps.io, who will be able to view the user’s IP address. While the PBO collects aggregate usage statistics for the application, it has no visibility of user IP addresses and does not collect any information entered by the user.

As SMART is hosted on an external server, the speed of the web application may be impacted by a number of factors. Typically the model will load within a few seconds, but it may take more time if there are many users attempting to access it at one time. 

In the first instance, please allow additional time for the model to load, or try reopening the model at a later time. Please note that the application will time out automatically if it is inactive for an extended period.

Given the complexity of the model, it's also important to carefully read all the instructions included in the web application, to make sure there are no errors in how policy settings are specified. If problems persist, please let us know via feedback@pbo.gov.au.

SMART is based upon a representative dataset of around 4900 taxpayer groups, each being of taxpayers with similar characteristics. Taxable incomes have been projected forward over the medium-term period using budget parameters. 

Total personal income tax paid is estimated both under current tax settings, and under the tax settings proposed by the user. The change in tax revenue under the proposal is then calculated, and adjusted to account for the timing of tax revenue collections. Note that estimates for the number of individuals affected and the average change in tax paid do not account for the timing of tax collections.

Distributional information on the impact of the proposal by gender, State and Territory, or age, is then calculated by multiplying total tax paid for each taxpayer group by the share of taxpayers that are within each category. 

SMART is based upon demographic data and projections for taxable income for around 4,900 representative taxpayer groups. This underlying dataset has been produced by using clustering algorithms to group together taxpayers from the full set of de-identified personal income tax returns in the 2021-22 income year. Each group represents between 20 and 270,000 taxpayers, with group size varying depending upon how common different types of taxpayers are. Individual taxpayers are not identifiable in this dataset.

Taxable incomes for each taxpayer group are grown over the medium-term period based upon 2023-24 Mid-Year Economic and Fiscal Outlook forecasts and PBO analysis. As SMART does not model all features of the personal income tax system, estimates for revenue raised under current policy settings are then adjusted to ensure consistency with current projections. 

While the methodology behind SMART is consistent with that used for PBO costings, results may not be identical for a number of reasons:

  • PBO costings may in some cases account for behavioural responses to tax changes, whereas SMART does not model such responses
  • PBO costings for some policies may be based upon the full dataset of income tax returns, rather than the clustered dataset that underpins SMART
  • PBO costings may include departmental costs associated with implementing policy proposals, which are not modelled in SMART.

SMART incorporates several features that expand upon the personal income tax model included in the PBO's Excel-based Build your own budget tool. In particular, it makes use of a new underlying dataset of representative taxpayers that is designed to better capture differential growth in the various components of taxable income, and the variation in taxable income across the population of taxpayers. These and other features mean that SMART is generally able to provide more detailed and sophisticated estimates of the financial and distributional impacts of changes to personal income tax policy settings, as compared with those produced by Build your own budget.

SMART is the latest in a series of PBO products and analytical tools that seeks to enrich public understanding of budget and fiscal policy settings. SMART expands upon previously released PBO tools such as Build your own budget and the PDI Calculator by providing users with more detailed information on the distributional impacts of changes to personal income tax settings. The tool also draws upon a range of methodological improvements to provide more sophisticated estimates of the financial impact of such changes.

Publishing SMART is also part of the PBO's agenda to enhance the transparency of the PBO's analysis, by allowing for broader engagement with our models and costing tools. While the results do not constitute a PBO costing, SMART is based upon similar methodology and data to that used to produce PBO costings. We welcome ideas and feedback from the public for how the PBO may be able to increase usability and accuracy of the tool. 

While the results from SMART do not constitute a PBO costing, the methodology and data is similar to that used to produce PBO costings, and so will generally provide similar results for relatively small changes to tax policy. As SMART does not model behavioural responses to tax policy changes, the estimates produced by the model will be less reliable in the case of major changes to tax policy settings that could result in significant behavioural responses from taxpayers. 

The data behind SMART can be downloaded from our data portal. 

Note that you can also download the results of any policy scenarios you've produced using SMART by clicking 'Download the results as an Excel file' on the Detailed results page of the web application. The Excel results file also includes information on the total projected number of taxpayers in each year.

The PBO is making the code behind the SMART model and Shiny application available to interested users. Users can request the model code by emailing feedback@pbo.gov.au with the subject line: 'Request for SMART model code'. 

Please note that the PBO will keep a record of the the requestor's email to enable us to request feedback or provide updates on the model in future.