Tax administration Administration Consultation

Proposed exclusions from shorter period of review for small and medium entities

Author: The Tax Institute

Published Date: 15 Sep 2022


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The Tax Institute welcomes the opportunity to make a submission in relation to the exposure draft of the Income Tax Assessment (1936 Act) Amendment (Period of Review) Regulations 2022 (Cth) (draft regulations).

In the development of this submission, we have closely consulted with our National Small and Medium Enterprises and Large Business and Internationals Technical Committees to prepare a considered response which represents the views of the broader membership of The Tax Institute.

The changes made by the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020 (Cth) to businesses with an aggregated turnover of less than $50 million were intended, in part, to simplify their reporting obligations and reduce the amount of red-tape to which these businesses were subject. Australia’s tax system contains significant complexity and compliance costs for businesses and The Tax Institute is of the view that it is important to ensure that administrative burdens are not unreasonably increased.

Of particular concern, whilst the consultation for the draft regulations focuses on the consequences for the period of review for businesses, there may be consequences for individuals not in business. These implications, although briefly acknowledged in the explanatory materials, have not been made clear to the public and are likely not intended to fall within the scope of the draft regulations. We consider that the potential impacts on the period of review for individuals not in business is an unintended outcome that should be amended.

We also consider it important for the draft regulations to achieve the appropriate balance between ensuring that taxpayers with complex or high-risk affairs are subject to the appropriate period of review and providing businesses with simpler tax affairs certainty of their tax obligations. Aspects of proposed exclusions encompass common or low-risk transactions, and may impact taxpayers who should retain the right to a shorter period of review. As currently drafted, the draft regulations may result the period of review for entities with simple tax affairs being inappropriately extended beyond a two-year period, contrary to intended scope of the legislation outlined above. There are also concerns that the proposed application date may result in inequitable outcomes due to its retrospectivity.


  • Published By:The Tax Institute
  • Published On:15 Sep 2022

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The Tax Institute
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