Publication date: 01 Mar 99 |
Source: THE TAX INSTITUTE
The Taxation Institute of Australia has commended the Review of Business Taxation's second discussion paper "A Platform for Reform" as a comprehensive and worthwhile document and praised John Ralph for his Review's open approach to consultation on the future of business tax in Australia.
"The structure of the document, as a collection of issues and options, rather than a statement of policy, gives the community at large an opportunity to assess the costs and benefits of arange of reforms to the taxation of business investments and entities," said Taxation Institute of Australia President, Mr Ken Spence.
"We are also pleased that in addition to these options, the document identifies some clear changes in direction in relation to the future tax treatment of trusts, capital gains tax indexation, company distributions, franking of distributions of entities and concessions, particularly in the area of accelerated depreciation."
Mr Spence said that it was clear that John Ralph had respected the Governments call for changes to business taxation to be 'revenue neutral'. However, Mr Spence also noted thatoutside the scope of the Review, the Government had estimated flow-on effects from the introduction of the Pay-As-You-Go system to generate an additional $2.6 billion in revenue from corporate Australia.
"Therefore, the Institute believes the Review should be given the scope to investigate optionsthat may impact on expected revenue levels in the short term, but give Australian business a competitive edge in the long term," he said.
The Institute will be evaluating the implications of these changes in detail over the coming months and submitting a document to the Ralph Review in response to A Platform for Reform which will specifically address the following:
Entity Taxation; Tax base Concepts; Consolidation of Entities; Fringe Benefits Tax; and Tax Concessions.
The Taxation Institute did, however, express its concern regarding John Ralph's recommendation to the Government to either introduce remedial provisions effective from thedate of release of A Platform for Reform or incorporate with the final reform measures, stringent transitional rules applying to any benefits that had been created after the release of the discussion paper.
"The discussion paper document covers every corporate tax issue imaginable and providesoptions, not solid statements on what direction Government policy should take," said Mr Spence.
"Given this, how can the Treasurer propose transitional rules, back dated to February 22 to catch individuals and businesses who are operating under the tax laws as they apply now."
"We are very keen for the Treasurer to immediately clarify what he meant by his statement that 'the Government would be moving with either special transitional rules or rules as oftoday (22/2/99), to ensure that such advantage cannot be taken'."
"The Taxation Institute strongly recommends, any new tax avoidance measures be effective only from the date of policy announcement and not be backdated to include transactions or arrangements made in the interim period," said Mr Spence.