05 May 06
Exposure Draft on Inoperative Taxation Provisions
The Taxation Institute has been reviewing the Exposure Draft aimed at removing inoperative provisions (Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006 - see 2006 TAXVINE No 7(5)(7 April 2006)). At this stage, the Taxation Institute does not propose to make a submission as, other than the doubtful justification for removal of historic source rules contained in the draft Explanatory Materials, there appears to be little of concern. Nevertheless, there are two observations that can be made. The first observation is that the repeal of the limited source rule provisions in ss 25(2) and 38 to 43 of the ITAA 1936, (which still have operation with non-residents in non-DTA jurisdictions) should have been accompanied by the introduction of effective source rules. Secondly, although it may have taken almost 9 years, the Government has finally conceded (indirectly) that s 21A ITAA 1936 was not effectively incorporated in the ITAA 1997. Section 21A has been inoperative in respect of non-cash payments between independent contractors since 1997. The Exposure Draft proposes to overcome that defect through the introduction of s 15-2 ITAA 1997.