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Ralph Reviews' Advisory Board supported by tax profession

Publication date: 04 Jan 99 | Source: THE TAX INSTITUTE

The Taxation Institute of Australia has applauded the release of the first Review of Business Taxation Discussion Paper, "A Strong Foundation' and, in its comprehensive submission to the Review, described the recommendation to establish an Advisory Board as very positive and a sign that the Review is listening to the tax profession.

"Taxation professionals have long sought the establishment of some form of independent board to observe the formulation of business tax and it is refreshing to see that the Review is listening to industry opinion," said Taxation Institute President Ken Spence.

The Taxation institute of Australia's submission to the Gibson Committee in February 1998 went to great lengths to point out the fundamental problemsin the formulation and development of taxation policy in Australia and recommended the establishment of both an Advisory Board and an Administration Review Board.

"It is imperative that such an Advisory Board adopt a consultative role from the outset and be ferociously independent," Mr Spence said.

"It must not be subservient to public service control or direction nor subjectto the effective control by Treasury through starvation of funds or by dictationas to what form enquiries might take or from whom they might be made."

The TIA submission also sounded a warning to the Review regarding theprinciples underlying business taxation, which are fundamental to the success of the reform process.

"In order for the 'National Objectives for Business Taxation' referred to in A strong Foundation to be achievable, the principles underlying these objectives must be realistic and gain support of the business community," said Mr Spence.

"From a practical and commercial perspective, accounting concepts must be favoured as the income base. This would assist with the reduction in compliance costs which are currently estimated to be 18% of taxes collected. The Institute does not support the idea of income that taxes unrealised gains."

The TIA submission called for the Review to recommend the abolition of Fringe Benefits Tax now that a method has been developed to quantify these benefits on employees group certificates.

"FBT is by far the most unpopular tax introduced in the past 20 years because of its incredible complexity and costs of compliance. Arecommendation for abolition of FBT by the Review would demonstrate that it really means business!" said Mr Spence.

The uncertainties and continuing delays inherent in the current rulings system were also addressed by the TIA in its submission.

The TIA said that the practice of legislation by press release and retrospective legislation was not only unfair to taxpayers but irresponsible as press releases generally do no conform with draft legislation when introduced into Parliament and are vague and unclear.