Publication date: 07 Aug 00 |
Source: THE TAX INSTITUTE
The Taxation Institute of Australia is "cautiously supportive of the Treasurer's announcement to undertake further consultation on Option 2 (or the Tax Value Method of determining taxable income) before committing to an implementation timeframe," Taxation Institute President Mr Ray Conwell said today. Mr Conwell was commenting after leaving the meeting of the Business Coalition for Tax Reform at which the Treasurer announced his position.
"While supportive of the decision to undertake further consultation on TVM, the Taxation Institute still believes there has been inadequate examination of alternatives to Option 2," said Mr Conwell.
"Despite claims that alternatives had been considered by the Ralph Review, the truth is that very little or no analysis or benchmarking was done by that Review. The conspicuous absence of any real alternatives in the Ralph Review sets Option 2 apart from the other recommendations of that process. We are therefore pleased that the Treasurer has adopted the Taxation Institute’s proposal to ‘road-test’ the Tax Value Method in implementing the Taxation of Financial Arrangements regime before proceeding more generally with it", he said.
Our fundamental concern that the purported benefits of TVM have not been analysed or articulated by its proponents remains, and it is critical that the further consultative processes are not constrained in the matters and issues that can be considered. It would be a ‘Claytons consultation’ if other alternatives were not open for consideration. Genuine consultation is essential if TVM is to receive the support of the business community and taxation practitioners essential to its introduction.
Mr Conwell added that some of the perceived ‘blackholes’ in the current taxation system which were supposed to be fixed with the implementation of TVM could be effectively solved within the current law without the risks and trauma of its total abolition.
"The Institute has always been committed to the pursuit of a framework for Australia’s business taxation system that accords with ‘world’s best practice’, in terms of its equity, clarity and efficiency. TVM is untried, unproven and untested anywhere in the world. For this reason, unlike GST, its benefits are for its proponents to establish before the risks and costs are imposed on Australian businesses."
"The Institute believe the removal of the July 2001 implementation deadline and the further consultation announced by the Treasurer is a plus for business and their advisers who can now get on with the job of ensuring the latest changes to the taxation system - GST, ABN, Pay-As-You-Go and the host of other changes- are bedded-down."