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Australia's struggle with tax transparent companies.

Publication date: 01 Oct 07 | Source: TAX NOTES INTERNATIONAL

Issue: Vol 48 No 1 2007

Pages: pp.83-102

In Australia there has been a growing recognition of, or enacting for, a new business form known as a transparent company. Various sectors have pushed for Australia to broaden its recognition of and legislation for transparent companies, which to date have been restricted. This article analyses the political and economic drivers for the introduction of transparent entities. The drivers for the introduction of S corporations and limited liability companies in the US, limited liability partnerships in the UK, and loss attributing qualifying companies in NZ are discussed. The article explains that a major obstacle for the broad introduction of transparent companies is the Australian government's underlying policy against flow-through taxation when the business form reduces members' risk via liability protection, but arguing that the policy is surmountable, provided restrictions on losses are incorporated into a transparent company's flow-through taxation treatment.

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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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