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Thursday, 22 August 1996
Page: 2976


Senator SHORT (Assistant Treasurer) —I present a response to the 345th report of the Joint Committee on Public Accounts on the income tax bills. I seek leave to incorporate the response in Hansard and to move a motion in relation to the document.

Leave granted.

The response read as follows

STATEMENT BY THE ASSISTANT TREASURER, THE HON JIM SHORT

TAX LAW IMPROVEMENT PROJECT

Mr President

On behalf of the Government I thank the Joint Committee of Public Accounts for its Report No. 345 and express our appreciation for the time and commitment which Committee members, and their staff, have invested in its preparation. I include in that appreciation the time and interest invested by the many professional organisations and individual persons who made submissions to the Committee.

The Joint Committee has taken a continuing interest in the rewriting of the income tax law. In November 1993, the Committee tabled its Report 326 An Assessment of Tax which recommended, among other things, the setting up of a broadly-based Task Force to rewrite the income tax law. The Tax Law Improvement Project was announced in the following month.

In November last year, the Committee tabled its Report 343 Tax Law Improvement: A Watching Brief in which it endorsed both the consultative way in which the project was proceeding and the intention to deliver the rewritten law progressively.

The Income Tax Assessment Bill 1996 and 2 related Bills, which are the subject of the Committee's latest report, are the first major instalment of the rewrite of the income tax law.

The Government is pleased that the Committee endorses the Bills and reaffirms its support for the progressive delivery of the new law.

Rewriting the income tax law so that it can be more easily understood has important micro-economic benefits for all Australians. Clearer law is inherently fairer. The Government wants to secure these benefits as quickly as possible.

The Government originally intended that the new law would apply for the current income year, as earlier versions of the Bills have been public since they were first introduced in November 1995. However, we recognise that the proroguing of Parliament in February created some uncertainty in the community about the reintroduction of the Bills and there has been unavoidable delay to the Parliament's consideration of them.

I note that the Committee has recommended that the commencement of the Bills be postponed until the income year following Royal Assent. The Government believes that a definite start date needs to be conveyed to the community, so that it can plan with certainty.

In light of this, the Government has decided to defer the commencement of the new law until the 1997-98 income year (which for most taxpayers will start on 1 July 1997). This decision will give everyone more time to ensure a smooth transition to the new law.

The Committee also recommends a small number of minor technical changes to the Bills, none of which involves any change in policy. I can inform the Senate that the Government accepts those recommendations and will make those changes.

Rewriting the law will also require the Commissioner of Taxation to update his public rulings to reflect any changes in the new law. Taxpayers need certainty and are looking for an assurance that rulings obtained under the old law will not lapse simply because there has been a change to simpler language. I note with approval that the Committee endorses the Commissioner's proposal to negotiate, with the tax professions, a suitable process and timetable for rewriting affected rulings.

In a task as large as that embraced by this project there is always a danger that inadvertent errors may occur. I recognise the concern that any such errors be swiftly corrected. Again, I note with approval that the Committee endorses the process recently negotiated by the Commissioner and the tax professions for identifying and dealing with such errors.

The Committee's other recommendations raise wider issues which will require closer examination by Government.

Mr President, I am also taking this opportunity to announce a major improvement to the new law which will overcome a longstanding practical problem. The Government has decided to amend the Bills in the House of Representatives to introduce new, streamlined arrangements for allowing public listed companies to trace who beneficially owns their shares.

Companies that maintain continuity of their beneficial ownership may carry forward unused deductions, as tax losses. However, the existing processes for identifying ownership have been notoriously difficult and time consuming because of the varying ways in which shares can be held. In rewriting the losses provisions, the project members and corporate representatives have worked hard to resolve these difficulties. The new arrangements, which will improve certainty and bring about significant compliance cost savings, demonstrate the Government's commitment to supporting new ways to reduce excessive compliance cost burdens on business.

These amendments address longstanding concerns of the corporate sector. The amendments were referred to the Committee, but the Committee was not able to consider the proposals before completing its report.

Finally, Mr President, I repeat my thanks to the Committee for its report and look forward to a speedy passage of the Bills by the Senate when they arrive in this place.


Senator SHORT —I move:

That the Senate take note of the document.

Debate (on motion by Senator Chris Evans) adjourned.