The Government has previously announced its in principle support for the development of the Tax Value Method of determining taxable income. This new concept for design of the tax law was a key recommendation of the Ralph Review.
The Government believes that the Tax Value Method, if implemented properly, has the potential to underwrite the development of a stable, less ambiguous and more understandable income tax system, and in particular, one more readily conducive to the manageable, ongoing development of the tax system into the future.
There are many detailed issues that need to be resolved as the Tax Value Method is developed and this will require on going consultation with all sectors of the business community as well as a major education campaign for practitioners.
The Government previously indicated it would aim for a start up date of 1 July 2001 for the Tax Value Method.
However, it is clear there are many in business who believe they would not be ready by that date, particularly considering the changes on GST and PAYG. No additional revenue is budgeted to be raised from this option. In the circumstances there is no requirement for a 1 July start-up.
The development of this option will be done with consultation through a new Board of Taxation providing input from business users, and aiding in the education process. It is expected that the process will work on developing exposure legislation to allow the study of the full ramification of the changes.
Board of Taxation
The Ralph Review recommended the establishment of a Board of Taxation to advise on the development and implementation of business tax legislation. Such a Board would expand on the extensive consultation on business tax issues which was a hallmark of the preparation of the Ralph Report and has continued with the Government’s implementation of its business tax reform agenda. The Government is, however, extending the concept proposed by the Ralph Report and is establishing a Board of Taxation with a mandate to advise on other aspects of the taxation system as well.
The Board of Taxation is a non-statutory body which will advise the Government on the design and operation of Australia’s tax laws, including on issues relating to the integrity and functioning of the tax system. An important role of the Board will be to facilitate full and effective community consultation in the implementation of tax policy decisions.
Dick Warburton will be the inaugural chair of the Board. He is currently Chairman of David Jones and holds a number of directorships as well as being a member of the Reserve Bank Board.
The majority of the members of the new Taxation Board will be drawn from the business and community sector and will be announced shortly. Also on the Taxation Board as ex-officio members will be the Secretary of the Treasury, the Commissioner of Taxation, and the First Parliamentary Counsel.
The Board’s activities will be supported by a secretariat provided by the Treasury. As well as drawing on the knowledge and experience of its members, the Board will have a capacity to commission research and other studies approved or referred to it by the Treasurer.