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Role of the Board of Taxation - Presentation by Chris Jordan

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Title: Role of the Board of Taxation - Presentation by Chris Jordan Last modified by: Kim Hansen Created Date: 2/11/2003 9:26:35 PM Document presentation format – PowerPoint PPT presentation

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Title: Role of the Board of Taxation - Presentation by Chris Jordan


1
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2
Topics
  • Role of the Board of Taxation
  • Review the Boards work
  • Highlight issues on the Boards plate
  • Focus of the Boards activities in 2003

3
Board of Taxations Role (1)
  • The Boards mission is stated in its Charter
  • Recognising the Governments responsibility for
    determining taxation policy, and the statutory
    role of the Commissioner of Taxation, to
    contribute a business and broader community
    perspective to improving the design of taxation
    laws and their operation.

4
Board of Taxations Role (2)
  • Purely an advisory body to the Treasurer and the
    Government
  • No mandate to determine taxation policy matters
    unless authorised by the Treasurer
  • No power of direction over the Commissioner of
    Taxation

5
Board of Taxation - Composition
  • In operation for two and a half years
  • Seven non-government members
  • Three ex-officio members
  • Serviced by a small Secretariat within the
    Treasury

6
Boards Work (1)
  • Major recommendations by the BoT
  • that development of the TVM not proceed
  • that best practice arrangements for community
    consultations be established
  • that the responsibility for tax legislation be
    transferred from the ATO to the Treasury

7
Boards Work (2)
  • that new office of Inspector-General of Taxation
    is a welcome addition to existing tax
    institutions
  • that there is no compelling case to change the
    existing tax treatment of trusts
  • Review of International Tax Arrangements

8
Taxation of Trusts (1)
  • The Government took the Boards advice that the
    entities taxation regime that was to commence in
    July 2001 - not proceed
  • When the Government withdrew that Bill, it
    indicated a new round of consultations would be
    undertaken on principles that can protect
    legitimate small business and farming
    arrangements whilst addressing any tax abuse in
    the trust area

9
Taxation of Trusts (2)
  • The Government announced that the Board would be
    part of the new round of consultations
  • The Board examined the essential issues with the
    assistance of the Treasury, ATO and external
    experts

10
Taxation of Trusts (3)
  • The Boards report was released by the Government
    on 12 December 2002
  • The Treasurer announced on 12 December 2002 that
    a new measure would be introduced to replace
    section 109UB that deals with distributions from
    trusts

11
Taxation of Trusts - Boards Recommendations (1)
  • The efficiency and equity of the tax system would
    not necessarily be improved by aligning the tax
    treatment of trusts and companies
  • Retain the current flow-through treatment of
    distributions of non-assessable amounts

12
Taxation of Trusts - Boards Recommendations (2)
  • Improve effectiveness and fairness
  • improve the effectiveness of the deemed dividend
    rules so as to more effectively prevent
    beneficiaries accessing trust income that has
    borne tax only at the company tax rate and
  • remove the unfairness in the operation of section
    109UB that is currently inducing some small and
    medium-sized business operators to establish
    arrangements that enable them to avoid the
    operation of the section completely

13
Taxation of Trusts - Boards Recommendations (3)
  • Commissioner of Taxation to clarify and publish
    his views about the deductibility of interest on
    borrowings used to finance non-assessable
    distributions to beneficiaries of discretionary
    trusts
  • If the rulings are unable to deal with the
    matter, a legislative solution should be
    considered

14
International Tax (1)
  • Working Group Tony DAloisio, Chris Jordan and
    Brett Heading
  • 58 submissions from organisations and individuals
  • The Boards report was submitted to Government on
    28 February

15
International Tax (2)
  • CFC and FIF rules complex - imposes significant
    costs on business
  • The costs of maintaining these rules can no
    longer be justified
  • The tax system needs to continually adapt to
    increasingly integrated global business
    environment

16
International Tax (3)
  • Boards report in two parts
  • Recommendations Report
  • Consultation Report
  • Confidential volume not to be published but will
    be made available to the Treasurer
  • Up to the Government to decide when to make the
    report public - as is the usual case with all
    Board reports

17
Looking Ahead - 2003
  • Public consultation on an exposure draft
    legislation on the definition of a charity
  • Review the effectiveness of community
    consultation arrangements and the quality and
    effectiveness of legislation in delivering its
    policy intent
  • Board will be developing its work program in this
    area

18
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