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CGT Bill- don't compromise Senate scrutiny

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Media Release 28 Nov 99

CGT Bill - don’t compromise Senate scrutiny OafdjiJL The investm ent and Financial Services Association today called on the parties in the Senate to scrutinise in the usual manner the actual provisions o f the New Business Tax System (Integrity and other measures) Bill 1999. This Bill reforms the CGT law

and was drafted in response to the Ralph Review o f Business Taxation.

Lynn Ralph, IFSA’s CEO, said; ‘The Bill has some serious technical flaws which as yet have not been debated. With complex and major legislation o f this type it would be normal for the Bill to be referred to the appropriate Senate legislation committee. If this does not occur the committee o f the whole debate should be an intensive one.

‘The Bill fails to deliver the Government’s promise o f a 50 per cent cut in CGT to all Australian investors. In this regard 3 million Australians with moneys in a managed investment will receive CGT relief as low as 25 per cent. However, investors who have direct shareholdings and property will reap the full 50 per cent relief. This is a

most adverse outcome and was not contemplated in the Ralph Review. As those investors who hold managed funds tend to be in the low and middle income bracket e.g. retirees, it is reasonable to conclude that the current provisions favour the better off (who own second houses and have extensive share portfolios). On this basis the

CGT relief is highly regressive.

TFSA has advice from the accounting firms and other experts which confirms this unfortunate outcome. Furthermore our information indicates that the explanatory memorandum is misleading in so far as it suggests that the Bill delivers full CGT relief when in fact it does not. This advice should be tested as evidence before the

relevant Senate committee. Hopefully, the Senate will on this critical occasion act as a house o f review and properly scrutinise this legislation’, Ms Ralph concluded.

For further information please contact Lynn Ralph (0417 232 958) or Richard Gilbert (0417 247 998)

Level 24, 44 Market Street, Sydney NSW 2000

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Hi: 6 1 2 9299 3022

Fax: 61 2 9299 3198