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CGT rewrite is another lost opportunity for tax reform

Publication date: 29 Jan 98 | Source: THE TAX INSTITUTE

In public hearings conducted today by the Joint Committee of Public Accounts the Taxation Institute of Australia (TIA) was critical of the process for the rewrite of the capital gains tax provisions and of many of the rewritten provisions themselves.

The rewrite of the capital gains tax (CGT) provisions contained in the Tax Law Improvement Bill (No. 2) 1997 fails to address critical issues identified by taxation professionals and amounts to another lost opportunity for tax reform, according to Taxation Institute of Australia Tax Technical Director, Ms Annamaria Carey.

"Although there have been some positive structural changes to the CGT provisions, technical issues are poorly expressed and there has been inadequate time to complete and review the entire rewrite," Ms Carey said.

"These problems coupled with the chaotic consequences of progressive implementation of the rewritten income tax law have created a situation that is close to unworkable," she said.

These and other key concerns with the CGT rewrite are contained in a Submission to the Joint Committee of Public Accounts by the ASCPA, the ICAA and the TIA on the Tax Law Improvement Bill (No.2) 1997.

Key recommendations contained in the Joint Submission are:

that final consideration of the Bill should be deferred until the Government makes a decision on overall tax reform; that the Bill be reviewed in light of recommendations of the Bodies' Joint Submission and the TLIP project should be extended both in terms of time and Terms of Reference to address the issues raised; the CGT rewrite should contain a 'no disadvantage' rule to operate for 2 years to protect taxpayers from unforeseen consequences of the Bill; and errors and technical issues identified by the Bodies should be addressed.

The Bodies believe that final consideration of the rewrite should be deferred until such time as the Government's proposals in relation to the reform of the taxation system are announced.

"If an overhaul of the entire tax system is going to take place, why waste Parliament's time discussing this rewrite now when later amendments will need to be considered to accommodate tax reform?" Ms Carey said.