At The Tax Institute’s recent 5th Annual Tax Forum, we were very pleased to have the Assistant Treasurer, the Hon David Bradbury MP, provide a keynote address to attendees. The Minister kicked-off his speech by acknowledging “a highly regarded Institute that's been supporting the tax profession and contributing to the community since 1943”.
The Minister also announced a post-implementation review by the Board of Taxation into the impact of tax laws on deemed dividend payments by private companies: Division 7A. The Tax Institute has congratulated the Government on this announcement.
The laws in Division 7A have been a bugbear for tax professionals since their inception 14 years ago. As members are only too aware, the recent actions by the ATO on unpaid present entitlements owed by trusts to private companies has created controversy and has only exacerbated the problems faced by tax professionals in trying to navigate this complex area of law. Trusts and private company groups rely heavily on internally generated funds as a source of finance, particularly in the SME market and the ATO’s actions have markedly increased the cost.
A Board of Taxation review examining the effectiveness of Division 7A is timely as the provisions now have considerable history behind them. The experience that the tax profession has had with these provisions will form invaluable input to this review. We will ensure that the scope of the review will be appropriately wide ranging and will allow extensive, open, public consultation on all aspects of Division 7A.
In other news, last week we saw the Government introduce a significant amount of tax legislation into the House of Representatives. The legislation seeks to implement many Budget announcements, such as the changes to MIT withholding rates and ETPs, to name just two. It also seeks to enact the previously announced retrospective changes to the consolidation rights to future income rules and the transfer pricing laws. The Tax Institute continues to be a loud voice in opposing retrospective changes such as these and we will be working hard to ensure that the Parliament provides further scrutiny to the changes. I will keep members posted.
Robert Jeremenko is Senior Tax Counsel of The Tax Institute.
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.