SUBJECTS: Tax secrecy provisions, merging of Tax Acts, Tax Design Review Panel
… while the Tax Review is underway, with a view to simplifying and modernising the Australian Taxation System. Assistant Treasurer Chris Bowen outlines some of the details at the Institute of Taxation Conference in Sydney today. Business Reporter Lisa Cretfield asked him about the Government's plans.
What we're doing is consolidating the tax secrecy laws that currently spread over 18 different laws, consolidating them in one Act and also making it clear when tax information can be used by other government agencies and when it cant, and to summarise it could only be used in very serious prosecutions. So, it will provide more certainty to taxpayers about when their information can be used and also simplifies the tax system by putting it all in one part of the Act.
So this should allay any public or privacy concerns, fears of Big Brother looking into their lives?
There is a balance to be reached here. We need to protect tax payers information but by the same token the public would expect that if the government has available to it information in a serious prosecution that it be used. So there is a balance to be reached here, but I think this legislation reaches the balance but it's out for public comment and discussion.
The simplification of the two tax Acts, bringing them into one, how big a task is that?
It's more complex than you might think at first think, because the wording of the 1936 Act is a lot different to the 1997 Act, they're structured differently, so its not just as simple as picking up one Act and putting it in another, it's a big task. There's still 1900 pages in the 1936 Act. I've indicated that over the next four years I'd like to see the 1936 Act effectively closed down and all the elements of it moved into the 1997 Act.
What kind of an impact would it have when the Act is simplified?
I think that it's mainly for tax professionals; it provides more simplicity. I just don't think it's justifiable to have two tax Acts in a nation like Australia. I think it does add to complexity and it would be much simpler if we just had one and today I've set out an ambition to get there.
Now you haven't set a specific timetable for the simplification, but you've mentioned 2013 as a hopeful goal?
Timetables have been set on this before and haven't been met and for valid reason. The last process effectively crumbled under its own weight, it was so hard. So I've set an aspiration to have the two tax Acts amalgamated by 2013. We will do that progressively, in some areas by specifically setting out to rewrite sections of the 1936 Act and move it into the 1997 Act in areas where we are dealing with an issue, maybe in response to a Board of Tax Report or maybe in response to the Henry Review or maybe just as a policy measure, taking what we are doing and using that opportunity to move it into the 1997 Act.
Is there a danger that by simplifying the two Acts, you end up with one Act that is twice the size?
I don't believe that that's a valid concern. I think the 1936 Act does need to be modernised and does need to be moved into the 1997 Act. There are some people who say 'Look, we know where everything is in the 1936 Act, don't play with it', but I don't think that's a sustainable view going forward, we need to think about the next generation of tax professionals and whether its fair on them to leave them with two tax Acts.
In terms of the consultation process, what feedback are you getting from the industry with how satisfied they are?
Well, look, there will always be some issues around consultation. As I outlined in the speech a few minutes ago, there will always be times when proper consultation is not always possible but I do think we've made big improvements.
The Tax Design Review Panel made a series of recommendations, all of which have been accepted in principle and we now have minimum consultation periods without, say for very exceptional circumstances, we now have much more information on the Treasury website, consultation feedback, the Government's forward work program, so we have made real steps forward and the feedback to me from industry is that they recognise the improvements.