This week The Tax Institute’s Budget submission received some significant media attention. Of particular interest were our arguments against the extremely concerning recent trend of retrospective legislative announcements.
Our submission flags the changes to reverse consolidation tax laws which were in part backdated to 2001, amendments to the Petroleum Resource Rent Tax backdated to 1990, an overhaul of transfer pricing laws with retrospective effect from 2004 and amendments to the general anti-avoidance law in Part IVA, announced to apply from the date of announcement in March 2012, despite the community not knowing the details of those changes.
Taxpayers enter into transactions on the basis of the law as it is, not the law as it is rewritten after transactions have occurred. Retrospective changes in tax law are likely to interfere with bargains struck between taxpayers who have made every effort to comply with the prevailing law at the time of their agreement.”
This is completely against the grain of businesses and taxpayers trying to do the right thing. There is no particular rationale for the Government backdating legislation other than to collect as much revenue as possible and doing it in a way that is abhorrent to the taxpaying community.
We are in ongoing discussions with the Government and we continue to reiterate that policy changes must be made in an open and consultative way; you can’t get any less consultative than retrospectively changing the law.
The Government is developing an unhealthy addiction to retrospective tax legislation - it is high time for an intervention.
The Budget submission sets out our key reform priorities including:
- State Taxes Reform;
- An independent Tax Reform Commission to develop the Henry Review vision into a detailed, workable and affordable set of reforms;
- The simplification of trust tax laws project to remain on track;
- The professional standards regime for financial planners providing tax advice to commence as announced on 1 July 2012;
- Greater flexibility in contributing to superannuation, and an increase in contributions caps; and
- Shoring-up of Treasury resources to enhance essential industry consultation.
Please see below for details of other activities this week.
Robert Jeremenko FTIA