New Business Tax Proposals Unveiled In Australia

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

06 March 2002

A new method of assessing corporate income tax was unveiled today in Sydney to a consultative panel of accountants and industry representatives.

The Tax Value Method (TVM), which aims to calculate taxable income using the gain or loss in the value of a business's assets, including cash, was a proposal put forward by the 1999 Ralph Review of Business Taxation, but was put aside by the Government in favour of other, more pressing issues of tax reform.

Assigned to the Board of Taxation, the formation of which was another Ralph Review recommendation, the proposal has undergone a year of consultation and development, and today's forum marks the start of the final round of discussions before the 260 pages of legislation are submitted to the Government mid-year.

However ATO Assistant Commissioner Andrew England, who helped draft the proposal, believes that although the plan aims to simplify the two existing Income Tax Assessment Acts, and will provide a more robust and comprehensive structure for income tax law more consistent with economic and accounting approaches to income measurement, it is still likely to face opposition from the business sector and tax practitioners.

'TVM is not a new tax, it's a new way to draft income tax law and structure income tax law,' Mr England told journalists, pointing to the proposal's revenue neutral properties.

He added that the forum represents a new chance to win over the country's private sector, which is traditionally fearful of change, and has strong concerns about the taxation of assets rather than traditional forms of income.

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