The Government will defer the commencement date of reforms to commodity hedging taxation arrangements to allow for a more efficient harmonisation with remaining reforms to the taxation of financial arrangements, Minister for Revenue and Assistant Treasurer, Senator Helen Coonan announced today.
The commodity hedging taxation reforms were recommended by the Ralph Report on business taxation and are directed at minimising uncertainties and distortions in the current tax law. The reforms are also designed to facilitate efficient commodity hedging activity.
"The Government remains firmly committed to the introduction of reforms to commodity hedging taxation arrangements which were originally slated to commence from 1 July 2003," Senator Coonan said.
"Productive consultations have been undertaken with the cotton and gold industries on commodity hedging reforms and, as a consequence, the policy framework is well advanced.
"The deferral takes into account issues raised in industry submissions and also recognises that the forthcoming transition by companies to international accounting standards may impact how the proposed reforms appropriately reflect the commercial accounting treatment of commodity hedging arrangements."
Commodity hedging tax reform is an integral part of a larger set of reforms covering the taxation of financial arrangements (TOFA) which are being progressively developed.
Other TOFA reforms already introduced by Government include debt and equity measures, effective from 1 July 2001, and recent reforms to the taxation of foreign currency gains and losses which are currently under consideration by Parliament.
An exposure draft of the commodity hedging taxation legislation will be released together with the remaining reforms to the taxation of financial arrangements.
A revised commencement date for the commodity hedging taxation reform will be announced taking into account submissions received on the draft legislation and in sufficient time for business to prepare for these changes.