In media release No 43, issued 20 December 2012, the Chairman of the Board of Taxation, Chris Jordan, announced that the Board has released a discussion paper and is inviting written submissions to assist in its post-implementation review of Division 7A of Part III of the ITAA 1936.
The terms of reference are as follows:
Division 7A contains integrity provisions designed to prevent shareholders (or their associates) of private companies from inappropriately accessing the profits of those companies in the form of payments, loans or debt forgiveness transactions. Within this context the Board should:
- examine whether Division 7A gives effect to this policy intent;
- examine whether there are any problems with the current operation of Division 7A, including its interaction with other areas of the tax law, that are producing unintended outcomes or disproportionate compliance and administration costs; and
- to the extent that there are problems, recommend options for resolving them so that, having regard to the policy intent of Division 7A and potential compliance and administration costs, the tax law operates effectively.
The Board should also examine the potential for broader reforms to Division 7A, including whether the provisions could be expressed in a clearer and simpler manner. Any reforms will need to maintain the integrity of the tax law and revenue neutral or near revenue neutral outcomes.
The closing date for submissions is 15 February 2013. The Board should complete its review by 30 June 2013.
For more information, go here