Late yesterday the outgoing Assistant Treasurer announced that the Government will be amending Part IVA of the income tax law to ‘protect the integrity of the tax system’. The unseen amendments apply to schemes entered into or carried out from today - another complication for advisers to grapple with.
The Tax Institute issued a media release with respect to the Government’s announcement.
Most taxpayers seek to stay on the right side of the law and do not engage in tax avoidance behaviour, however, we support efforts to tackle tax-avoidance and protect the integrity of the tax system. Why these amendments are considered necessary is a mystery. Part IVA is not by any means broken. Any ill-conceived and potentially unnecessary reforms, including in response to recent court cases are destined to result in further uncertainty, increase compliance costs and possibly act as a deterrent to foreign investment.
Despite announcing a two-stage consultation process, the Government seems to have already made up its mind that legislative changes will be required. It is ludicrous to claim that consultation will occur, when one of the possible outcomes of that consultation is ruled out at the very beginning – the possibility that no change is required. How can the Government say, hand-on-heart, that it will consult extensively, when it has already decided there will be legislative change in the second half of this year?
You may recall that last week I spoke about our concerns with the exposure draft legislation in response to the Multiflex decision. Well, this week the legislation containing the amendments was introduced into Parliament and I am very pleased to report that many of the changes recommended by The Tax Institute have been taken up in Bill. These include ensuring that the Commissioner is required to consider several factors in deciding whether to withhold a refund, and that an objective ‘reasonableness’ test applies to the requirement to verify information given in relation to the refund.
The Tax Institute congratulates Treasury for its efforts to respond to tax professionals’ concerns in relation to the introduction of these measures and for managing to strike the right balance between the need for giving a refund to a taxpayer promptly and protecting the revenue.
Please see below for details of other activities this week.
Robert Jeremenko FTIA