On 19 May 2008, the Chairman of the Board of Taxation announced the release of the Board's issues papers on possible reforms to Australia's foreign source income anti-tax-deferral regimes (the controlled foreign company rules, the foreign investment fund rules, the transferor trust rules and the deemed present entitlement rules).
These issues papers complement the Board's position paper on the review of anti-tax-deferral regimes which was released on 12 March 2008.
These issues papers, which should be read together with the Board's discussion and position papers, cover the following topics:
- Public company exemption;
- Active investment exemption;
- Distribution exemption;
- Identification and measurement of interests; and
- Branch-equivalent calculations.
To assist in the Review process, the Board held consultation meetings in Melbourne on 26 May 2008 and in Sydney on 30 May 2008. The purpose of those meetings was to enable interested stakeholders to seek clarification on any aspects of the review’s position paper and issues papers and any other relevant issues.
The Board requested written submissions on the Review of Anti-Tax-Deferral Regimes by 20 June 2008. All submissions received were acknowledged.Copies of the Board's issues papers, the position paper and the discussion paper are available from www.taxboard.gov.au. Printed versions of the papers are available by email request sent to taxboard@treasury.gov.au, or by phoning Mr Vernon Joice on (02) 6263 4369.
Background
On 10 October 2006 the Government announced that it had asked the Board of Taxation to undertake a review of the anti-tax-deferral regimes — the controlled foreign company, foreign investment fund, transferor trust and deemed present entitlement regimes and provide a report to the Treasurer.
The Treasurer's Press Release announcing the Board's review is available from the Treasurer's website.
The objectives of this review are:
- to reduce the complexity and compliance costs associated with the anti-tax-deferral regimes including whether the current regimes can be collapsed into a single regime; and
- to examine whether the anti-tax-deferral regimes strike an appropriate balance between effectively countering tax deferral and unnecessarily inhibiting Australians from competing in the global economy.
On 25 May 2007, the Board of Taxation released its discussion paper on the Review of Anti-tax-deferral regimes. A copy of the discussion paper is available for download.
The Chairman of the Board of Taxation announced the release of the discussion paper via a press release.
The discussion paper:
- provides some background to and the framework under which the anti-tax-deferral regimes operate;
- explores possible options for reform including whether the current regimes can be collapsed into a single regime; and
- examines issues relating to each of the abovementioned review criteria.
The Board conducted targeted consultation with selected stakeholders in developing the discussion paper.
To assist in the Review process, the Board conducted consultation forums in June 2007. Consultation forums were held on 18 June 2007 in Sydney and 20 June 2007 in Melbourne. The consultation forums were attended by representatives from taxation professional bodies, major law and accounting firms, various major corporations and business associations.
The Board requested written submissions on the Review of the Anti-tax-deferral regimes by 06 July 2007. All submissions received were acknowledged. Copies of public submissions made to the Board are available from the Anti-tax deferral submissions page.
After considering the views of all stakeholders the Board will prepare its report and provide recommendations to Government around mid 2008.
On 12 March 2008, the Chairman of the Board of Taxation announced the release of the Board's position paper on possible reforms to Australia's foreign source income anti-tax-deferral regimes (the controlled foreign company rules, the foreign investment fund rules, the transferor trust rules and the deemed present entitlement rules).
The Board considers the principles set out in the paper provide a framework to reduce compliance costs and complexity while not inhibiting the ability of Australian businesses to compete globally.
The release of the position paper was welcomed by the Assistant Treasurer who noted that:
“The position paper will form the basis of further consultations with industry to allow the Board to formulate final recommendations for the Government to consider.”
The Board proposes to conduct further targeted consultations with industry stakeholders as input into developing detailed recommendations in line with the high level principles set out in the position paper. These detailed recommendations will form the basis of a report to Government later this year. The Board anticipates that this consultation is likely to occur in the first half of this year.
Copies of the Board's position paper are available for download. Printed versions of the paper are available by email request sent to taxboard@treasury.gov.au, or by phoning Mr Vernon Joice on (02) 6263 4369.
Further information on this review can be obtained from Christine Barron (02 6263 4480) and Vernon Joice (02 6263 4369) at the Board of Taxation Secretariat.
