The Federal Government, today announced a consultation process to consider reforms to the taxation treatment of certain rights and business expenditures, known as blackholes.
Blackholes occur when business expenses are either not recognised or are recognised inappropriately for income tax purposes.
The Minister for Revenue and Assistant Treasurer, Senator Helen Coonan said that while the Government has already implemented measures to address a number of identified blackholes through the uniform capital allowance system, some business expenditures remain unrecognised in the tax system.
Rights, although generally recognised for tax purposes, may be subject to varying tax treatments such that anomalous tax outcomes may arise.
In light of the Government's decision not to proceed with the Tax Value Method (TVM), the Treasurer announced that a systematic legislative treatment for blackholes and rights would be developed by July 2005 and, in the intervening period, they would continue to be dealt with on a case-by-case basis.
"I am now inviting taxpayers to make submissions on specific examples of blackhole expenditure and rights that are considered to be taxed inappropriately under existing tax law. The examination of blackhole expenditures and rights on this case-by-case basis will then facilitate the development of a legislative solution for blackholes and rights more generally," Senator Coonan said
"Reform will be confined to expenditures that are business related and will seek to align the tax treatment with their economic characteristics. Genuine examples of blackholes will be considered having regard to whether more appropriate tax outcomes will result in enhanced economic efficiency and taxation equity, whether any risks to tax law integrity arise in recognising the blackhole and will take into account the Government's overall fiscal strategy" Senator Coonan said.
The objective of any reform to blackholes and rights is to produce enhanced business efficiency and competitiveness and to provide a more equitable treatment of business expenditures" Senator Coonan said.
"The Government is keen to receive submissions that highlight any blackholes, This will continue the achievements made by the Uniform Capital Allowances regime, which addressed a number of blackholes that were identified in consultation with the private sector.
Further details on how to make a submission to the Government for case-by-case consideration or on the generic tax treatment of blackholes and rights are detailed as an attachment to this press release on the Treasury website at www.treasury.gov.au.
Media Contact: Bob Lawrence 0438 690 305