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A model idea : is the ICAA proposal for a tax transparent company the ideal model for Australia?

Publication date: 19 Aug 09 | Source: AUSTRALIAN TAX REVIEW

Issue: Vol 38 No 3 2009

Pages: pp. 161-180

Abstract:
One of the potential reforms currently being considered by the Henry Review is a proposal by the Institute of Chartered Accountants in Australia (ICAA) and Deloitte for the introduction of a tax transparent company (ICAA proposal). This proposal argues the tax transparency applying to closely held corporations and unit trusts would provide an enhanced tax system for micro-enterprises in Australia. While there are arguments that tax transparency does provide for an enhanced method for taxing business forms and their members, there are concerns about the consequences of following this economic ideal. This article will evaluate the model outlined in the ICAA proposal, and discuss what will be achieved if a transparent company is introduced in Australia. A number of alternative models will also be considered. Through this analysis it will be argued that a partial loss transparent company is the preferred model to achieve transparency, given the existing tax regime in Australia.

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Author profile

Dr Brett Freudenberg CTA
Photo of author, Brett FREUDENBERG Brett Freudenberg is an Associate Professor – Taxation at Griffith University (Australia). Brett is known for his research expertise in the tax law and policy issues facing private enterprises, as evidenced by his Fulbright Scholarship (2006) and over 50 refereed publications in leading Australian and international journals. Associate Professor Freudenberg’s research has analysed whether Australia should introduce a tax flow-through company (S Corporation), the tax treatment of discretionary trusts and the motivation for choice of business structure. Associate Professor Freudenberg’s research has informed government policy as he was invited to present his PhD research findings to the Australian Treasury as part of the Henry Tax Review. Brett is passionate about education being a transformative process, and his effectiveness as a teacher has been recognised through five national awards (including the award of two Australian Learning and Teaching Council citations: 2008 & 2011). - Current at 29 May 2017
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