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Targeted amendments to Division 7A

Published on 23 Nov 18 by THE TAX INSTITUTE

In our opinion, the Government’s approach in the Consultation Paper reflects an attempt to only selectively adopt some of the recommendations of the Board of Taxation Post-Implementation Review of Division 7A dated November 2014.

The Board’s Division 7A Report made wide ranging recommendations precisely because one of the criticisms of the evolution of Division 7A was the constant ‘band-aiding’ of the Division. The Board therefore specifically rejected this as an approach and recommended a package of measures that could be adopted as a replacement to Division 7A.

The Board of Taxation’s recommendations were made after extensive consultation and engagement with practitioners, the ATO, Treasury officials and taxpayers. In our opinion, the Consultation Paper should clearly outline why recommendations have not been adopted.

In our opinion, the measures in the Consultation Paper represent another band-aid fix to Division 7A. The Government needs to reconsider this approach and revisit the recommendations made by the Board of Taxation. We would strongly encourage the government not to continue the errors of the past by, once again, applying band-aid fixes to the Division.

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The Tax Institute is Australia's leading professional association and educator in tax, with offices in most major cities. Focusing solely on tax, the Institute provides the best resources, education and networks. Our mission is to equip tax professionals with everything they need to demonstrate the highest level of expertise and increase the advancement of public knowledge and understanding. We are also committed to propelling members into the future and onto the global stage with the introduction of the Chartered Tax Adviser designation.
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