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Costello's Housekeeping Still Taxing

Publication date: 15 May 02 | Source: THE TAX INSTITUTE

'We appreciate that some of our concerns have been addressed and suggestions over the past 18 months have been acknowledged. We have actively sought a fairer tax system for Convertible Notes and we argued strongly against the inequity of companies being forced to offset losses against franked dividends'.

'We also argued for a number of other reforms including: the removal of the inconsistencies between industry policy and the tax law through the introduction of statutory effective lives, reform of superannuation and the advancement of the Taxation of Financial Arrangements'.

'In a small number of cases, the technical studies indicated a substantial increase in effective life was appropriate. This was particularly the case with aeroplanes, pipelines, electricity generators and motor vehicles. While not disputing the technical studies, the Taxation Institute drew to the Government's attention the economic impact on some industries'.

'The introduction of statutory effective caps will benefit the aircraft and oil and gas industries but the problem still remains for the electricity and motor industries. Presumably the proposed infrastructure projects will have to go 'cap in hand' to the Government to obtain concessionary treatment. This is a less than ideal situation', Barry Low commented.

'In relation to Superannuation, the reduction of the Superannuation surcharge from 15% - 10.5% over 3 years does nothing to encourage accumulation of benefits. We urge the Government to continue working towards the removal of the surcharge all together. As we have stated before, we believe that such a decision will bring with it long term benefits and increased voluntary Superannuation contributions - thus a larger tax base on which to levy the exit tax', said Mr Low.

'The Institute is pleased that the Taxation of Financial Arrangements (TOFA) measures, which have been the subject of extensive consultation and discussion papers for approximately 10 years, are nearly complete. Of course the proof will be in the detail and as soon as it is further outlined, we believe that the completed legislation should be introduced as quickly as possible', he continued.

'Although the 2002 - 2003 Federal Budget has effectively tidied up some issues in the tax arena, we hope that this is only a starting point and that the Government will continue to make vast and measured improvements to the tax system', said Mr Low.

'Finally, in this regard it is disappointing to note that the funding for the proposed Inspector General of Tax and Board of Taxation has not been increased in order to aid in their meeting the huge task that face them as they endeavourer to further develop Australia's tax system', stated Mr Low.