November has proved to be a very exciting month from a tax tragic’s perspective. We have experienced a generational change at the very top of the Australian Taxation Office administration. Michael D’Ascenzo’s retirement as Commissioner will cap off the renewal of the tax hierarchy, with only Second Commissioner Bruce Quigley remaining to pass on the decades of experience that have otherwise flown out the door.
Michael can look back proudly at the changes he has wrought during his term as Commissioner, the chief among them being his sincere engagement in collaboration and consultation. On behalf of everyone at The Tax Institute, including staff, volunteers and members, I wish Michael well in his new role.
If that is not enough, the appointment of a new Commissioner from the private sector, a first ever, raises intriguing possibilities. The Tax Institute also looks forward to working with the Commissioner-designate, Chris Jordan, in facing the challenges of imposing and maintaining tax laws and their administration. I am sure that the next seven years will be quite a journey for us all.
The Div 6 rewrite policy options paper was released (admittedly in late October) and its contortions began to filter into our psyche during November. Try as I might, I cannot find in it a beneficial simplification of the present mangled state of trust taxation. It can only be hoped that further consultation brings about a sensible outcome for us all — trustees, beneficiaries, tax advisers and, by no means least, tax administrators.
And then along came the exposure draft of the amendments to the general anti-avoidance provision, Pt IVA of the Income Tax Assessment Act 1936 (Cth). The proposed amendments have a certain metaphysical content in the sense that they perplex the mind with nice speculations of philosophy (with apologies to Samuel Johnson). Watching the courts struggle with new concepts like “non-tax effect” will be sport for years to come for us, the tax tragics. For the purpose of illustrating the metaphysical point, it is useful to set out the definition of that term here:
“non-tax effect means an effect other than:
(a) an effect relating to the taxpayer’s liability to tax (or withholding tax) in any year of income; or
(b) an effect that is incidental to achieving an effect, for the taxpayer, covered by paragraph (a).”
It should be noted for posterity that both of these measures (the Div 6 rewrite and Pt IVA) have and will continue to consume a huge number of precious volunteer man-hours in simply coming to grips with their potential impact.
As I write, the Assistant Treasurer, the Hon. David Bradbury, MP, has raised the tempo of debate on the taxation of the digital economy. While the technical matte rs are grounded in the traditional tax issues of source, residency and permanent establishments, the revenue at stake is so vast that no government can afford to ignore the matter. We can expect that the debate will become more intense as governments and revenue authorities collaborate internationally to secure their “fair share”.
Ken Schurgott is President of the National Council at 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.