Assistant Treasurer: Restoring Integrity in the Australian Tax System

2 December 2013

Senator the Hon Arthur Sinodinos AO Assistant Treasurer
PO Box 6100
Parliament House


By email:

Dear Senator Sinodinos

Restoring Integrity in the Australian Tax System

The Group of 100 (G100) is an organisation of chief financial officers from Australia’s largest business enterprises with the purpose of advancing Australia’s financial competitiveness.

The G100 welcomes the opportunity to comment on the 64 previously announced but unlegislated tax measures contained in the joint media release between the Treasurer and Assistant Treasurer entitled “Restoring Integrity in the Australian Tax System”, which was issued on 6 November 2013.

The G100 are of the view that each of the measures which had already been widely consulted on, and had progressed to the exposure draft legislation stage, at which time professional bodies and industry had the opportunity to provide comments on the draft legislation, should not be abandoned, but should proceed. The appendix to this letter contains a table listing the measures for which exposure draft legislation has been released, and which the G100 strongly urges the Government to legislate in the near term.

The G100 wish to highlight that, although not specifically addressed in this submission, many of the 64 measures without exposure draft legislation deserve further consideration and broader industry consultation before a decision is made regarding whether to proceed with, or abandon these measures to ensure that the law operates as intended and provides sufficient clarity to taxpayers. Accordingly, the G100 consider that the timeframe for consultation for those measures should be extended beyond early December 2013 in order to better inform the appropriate course of action.

Furthermore, consideration must be given to the appropriate form and level of taxpayer protection prior to the abandonment of any of these measures. In a self-assessment environment, many taxpayers have relied on announcements and exposure draft legislation in forming their positions; these positions must be legislatively protected.

In respect of the modernisation of the controlled foreign company (“CFC”) rules, the G100 acknowledge that, whilst reform of the CFC rules must remain on the Government’s agenda, the timetable for the reform and introduction of these modernised rules may be deferred in the short term until the Organisation for Economic Co-Operation and Development (“OECD”) position is known, which is expected to be in September 2015.

Should any further information or clarification be required, please do not hesitate to contact Michael Johnston t/p 02 9282 8020.

Yours sincerely
Group of 100 Inc

Terry Bowen

Att: Appendix



Table of unlegislated measures with exposure draft legislation that should proceed

[table width ="100%" style ="" responsive ="true"] [table_head] [th_column]Item[/th_column] [th_column]Measure[/th_column] [th_column]Date Exposure Draft Released[/th_column] [/table_head] [table_body] [table_row] [row_column]44[/row_column] [row_column]International tax – review of the foreign source income anti-tax-deferral (attribution) regimes. Modernises Australia’s controlled foreign company rules to ensure Australian residents cannot accumulate income in offshore entities and thereby defer, or even avoid Australian tax. This project should proceed once the OECD position is known.[/row_column] [row_column]17 February 2011[/row_column] [/table_row] [table_row] [row_column]59[/row_column] [row_column]Loss recoupment rules – multiple classes of shares. Improves the operation of the tax loss rules in a limited range of circumstances (i.e. where a company has non-standard classes of shares or when it joins a consolidated group).[/row_column] [row_column]23 June 2011[/row_column] [/table_row] [table_row] [row_column]65[/row_column] [row_column](a) Capital gains tax – minor amendments ensuring the proper functioning of the capital gains tax provisions – restructure roll-overs
(b) Capital gains tax – amendment to include concessional treatment for revenue assets and trading stock
(c) Capital gains tax – amendment to the revenue asset and trading stock roll-overs for interposing a company. Extends the CGT roll-overs for business restructures.[/row_column] [row_column]15 October 2012[/row_column] [/table_row] [table_row] [row_column]67[/row_column] [row_column]Stronger Super – unlawful payments from regulated superannuation funds – promotion of illegal early release schemes. Introduces penalties for promoting schemes designed to obtain the illegal release of superannuation benefits.[/row_column] [row_column]20 August 2012[/row_column] [/table_row] [table_row] [row_column]76[/row_column] [row_column]Off-market share buybacks – implementing the Board of Taxation recommendations. Implements the recommendations of the Board of Taxation’s 2008 report on modifying the taxation treatment of off-market share buy backs.[/row_column] [row_column]20 October 2011[/row_column] [/table_row] [table_row] [row_column]79[/row_column] [row_column]GST – Government response to Board of Taxation report: GST administration – simplify grouping rules. Broadens and simplifies the GST grouping membership rules and enables holding companies to be entitled to register and group for GST purposes.[/row_column] [row_column]20 January 2011[/row_column] [/table_row] [/table_body] [/table]