Momentum Growing For Simplification Of Australia’s Tax Laws

by Mary Swire, Tax-News.com, Hong Kong

27 January 2005

According to reports in the Australian media, the administration of Prime Minister John Howard is planning a major simplification of the country's tax code, which a senior tax official says could be in place within the next year.

Under the changes, the present approach to combating tax avoidance through the introduction of new legislation to close loopholes would be scrapped in favour of the setting out of broad principles, and the issuing of rules and regulations by the Australian Tax Office.

According to The Australian news service, Dick Warburton, chairman of the government's tax advisory board, argued that the changes, which have been on the table for a number of years, should be put in place within the next twelve months.

The Liberal/National government’s majority in the Senate from July of this year will present the ideal opportunity for the reforms to be pushed through, Warburton told The Australian.

He added that the proposed approach will be tested in new legislation concerning the taxation of large companies, expected in the coming months.

Seeking to lend weight to the argument for simplification of the tax code, former High Court chief justice Harry Gibbs this week branded Australia’s income tax laws “a disgrace”.

“The legislation is absurdly voluminous compared with our own earlier legislation and with other tax systems, and the volume increases rapidly from year to year. Much of the legislation is obscure to the point of being incomprehensible,” Gibbs was quoted as remarking.

“It gives the Australian Taxation Office unacceptably wide discretionary powers, including those given by the anti-avoidance provisions,” he added.

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