Submissions

The Tax Institute is the most respected and influential contributor to the development of tax policy and administration in Australia. As part of this contribution, we prepare top level submissions on tax policy, administration and technical matters at both Federal and State levels. Non-confidential submissions prepared from 1996 onwards and covering legislation, ATO and Treasury consultative documents and papers, as well as rulings, determinations and a range of other ATO opinion and guideline documents, are available here.

• Post-Implementation review of the Tax Transparency Code (TTC)

  02 Apr 2019

  The Tax Institute welcomes the opportunity to make a submission to the Board of Taxation in relation to the Post-Implementation review of the Tax Transparency Code Consultation Paper (Consultation Paper).
  
  The Tax Institute acknowledges that increased transparency, including a well-designed voluntary TTC, will have a positive impact on the integrity of the tax system and thereby on voluntary compliance. In particular, transparency measures have the ability to positively influence the perception of taxpayers generally with respect to the large corporate sector and to underscore the important role they play in the economy. A properly designed TTC can assist in moving any public discussion away from unhelpful rhetoric, such as notions of a company paying its ‘fair share’ of tax, to more accurate and objective measures.

• Transfer Balance Account Reporting (TBAR) amendments

  29 Mar 2019

  In general, retirees face a $1.6 million cap on the amount they can use to purchase a tax-free superannuation pension. Existing retirement pension balances on 1 July 2017 (being the date TBAR was introduced) also count towards that cap.

  The transfer balance account is maintained to keep track of the remaining cap space for the retiree, with:

  • a credit arising when a member starts to receive a pension in retirement phase, and on 1 July 2017 for existing pensions in retirement phase; and
  • a debit arising when a member receives a lump sum in part or full commutation of the pension.
  • In recognition that it is difficult to bring the value of some pensions down to the cap, additional cap space is provided to allow for the full credit value of:
  • defined benefit lifetime pensions; and
  • life expectancy pensions and account-based market-linked pensions that were already in existence in retirement phase on 1 July 2017.

  These types of pensions were (in the most part) not account-based, so special values were used to work out the credit. For whatever reason, a special value was also used for the 1 July 2017 value of account-based market-linked pensions.

  Unfortunately, the interaction of the credit and later debit upon commutation did not always produce sensible outcomes. The Bill and Regulations are intended to rectify the position for account-based market-linked pensions and in some other situations.

• Small Business Taxation Division - Administrative Appeals Tribunal

  19 Mar 2019

  The Tax Institute supports the establishment of the Small Business Taxation Division (Division). However, some aspects of the Division require further consideration. The purpose of this submission is to outline the main issues that need to be considered as the Division is developed. In addition, The Tax Institute suggests that further consultation be undertaken by the AAT and ATO around 12 months after the Division has commenced operation to assess its effectiveness.

• 2019-20 Federal Budget Submission

  28 Feb 2019

  The Tax Institute welcomes the opportunity to make a submission to the Treasurer in relation to the 2019-20 Federal Budget. We refer to the media release issued by the Assistant Minister for Treasury and Finance, Senator the Hon Zed Seselja, inviting submissions for the 2019-20 Federal Budget where the Government has expressed its intention ‘to keep the economy strong and guarantee the essential services on which Australians rely’.

  The Tax Institute considers that a structurally sound Australian tax system is required to support the Government’s goal of keeping the economy strong and ensuring sufficient revenue is raised to support the provision of essential services relied upon by Australians.

  To achieve a structurally sound Australian tax system, one must cast an honest and critical eye over the current system and decide whether all the features of the current system should remain or should be removed in favour of new or modern features that better support Australia’s economic needs. Such a pursuit requires a strong political will.

• A Sharing Economy Reporting Regime

  25 Feb 2019

  The Tax Institute welcomes the opportunity to make a submission to Treasury in relation to the A Sharing Economy Reporting Regime Consultation Paper.

• Annual Tax Determinations

  15 Feb 2019

  Our submission addresses our main concerns in relation to the Consultation Paper. In particular, we have determined a ‘rule of thumb’ that could apply when determining which information should remain included in a Taxation Determination and which information could instead be published on the ATO website.

• Draft Miscellaneous Taxation Ruling MT 2018/D1 Miscellaneous Tax

  01 Feb 2019

  The Tax Institute welcomes the opportunity to make a submission to the Australian Taxation Office in relation to the Draft Miscellaneous Taxation Ruling MT 2018/D1 Miscellaneous Tax: time limits for claiming an input tax or fuel tax credit (Draft Ruling).
  
  The Tax Institute strongly recommends adopting the ‘Alternative view’, rather than the view adopted by the Commissioner in the Draft Ruling. The view adopted in the Draft Ruling leads to arbitrary and unfair outcomes, and perversely encourages taxpayers to adopt aggressive input tax credit claims in order to protect their entitlements.

• Targeted amendments to Division 7A

  23 Nov 2018

  In our opinion, the Government’s approach in the Consultation Paper reflects an attempt to only selectively adopt some of the recommendations of the Board of Taxation Post-Implementation Review of Division 7A dated November 2014.

  The Board’s Division 7A Report made wide ranging recommendations precisely because one of the criticisms of the evolution of Division 7A was the constant ‘band-aiding’ of the Division. The Board therefore specifically rejected this as an approach and recommended a package of measures that could be adopted as a replacement to Division 7A.

  The Board of Taxation’s recommendations were made after extensive consultation and engagement with practitioners, the ATO, Treasury officials and taxpayers. In our opinion, the Consultation Paper should clearly outline why recommendations have not been adopted.

  In our opinion, the measures in the Consultation Paper represent another band-aid fix to Division 7A. The Government needs to reconsider this approach and revisit the recommendations made by the Board of Taxation. We would strongly encourage the government not to continue the errors of the past by, once again, applying band-aid fixes to the Division.

• Review of the Income Tax Residency Rules for Individuals

  20 Nov 2018

  As Australian residence is one of the two foundation stones upon which Australia’s taxation jurisdictional claim rests, the importance and potential impact of this review of individual residence cannot be underestimated.

  Our submission addresses each of the design principles in the Consultation Guide rather than focussing on each individual question. There are two overarching concerns, being:

  • That the proposed changes ensure that the goals of certainty and simplicity are met and not frustrated by an integrity regime that seeks to deal with rare occurrences that arise not necessarily due to residence abuse but often due to the operation of other provisions of the Income Tax Assessment Acts; and

  • That the reform proposals mooted in the Consultation Guide will expand the scope of persons caught by the rules. This is so notwithstanding the assertion that the stated intention (on page 26 of the Consultation Guide), is that the revenue impact of the measure will be ‘immaterial or negligible’.

  Our view is based on the proposals which would include the development of a more adhesive residence rule, the creation of two clear bright-line tests (which may include the measurement of presence over any 12-month period) and a factor test coupled with revision of the superannuation test. Therefore, in light of these potential Page 2 impacts the Taxation Institute urges the Board to undertake the modelling and associated costings appropriate in the context of this major reform of Australia’s jurisdictional change.

• Miscellaneous amendments to Treasury portfolio laws 2018

  08 Nov 2018

  The Tax Institute welcomes the opportunity to make a submission to Treasury in relation to the Treasury Laws Amendment (Measures for a later sitting) Bill 2018: Miscellaneous amendments Exposure Draft (Exposure Draft). The Tax Institute seeks to address one matter in the Exposure Draft in relation to the amendment to subparagraph 14-255(1)(b)(i) of the Taxation Administration Act 1953 (Cth) (TAA).