The Australian capital gains tax is approaching its 20th birthday. This paper reflects on why the CGT provisions were introduced and considers how they have impacted upon taxpayers and tax practitioners. It argues that there has been progress in removing some of the inconsistencies and anomalies in the CGT regime, but that a number of problems still exist. The paper explores a variety of technical areas that are still problematic, including issues surrounding the grandfathered status of pre-CGT assets, technical difficulties with the operation of the small business concessions, and problems relating to the application of the CGT provisions to trusts.
The causes of these technical difficulties lie in inappropriate policy selection, poor or incomplete legislative drafting, poor implementation and administration of the provisions and 'legislative layering' - whereby new policy and legislation is superimposed upon an existing framework that is insufficiently robust or compatible.
Technical solutions can be attempted, but ultimately, the paper argues, the remedy to many of the technical problems does not lie in ad hoc and reactive fixes, but in a more principled approach to the design of the CGT regime.
This paper was also presented on 17 March 2005 at the 20th National Convention in Perth.
Prof Christopher Evans
Chris is a Professor, School of Taxation & Business Law, UNSW Australia, Extraordinary Professor, Department of Taxation, University of Pretoria, and Senior Research Fellow, Tax Law and Policy Research Group, Monash University. Current at 01 October 2016
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