On 13 October 2010, the Board of Taxation released its discussion paper on the review of the taxation treatment of Islamic finance, banking and insurance products. The Chairman of the Board of Taxation announced the release of the discussion paper via a press release. The Board has developed this discussion paper to facilitate stakeholder consultation.
To assist in the Review process, the Board conducted consultation meetings on 8 November 2010 in Melbourne and 11 November 2010 in Sydney. The consultation meetings 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 taxation treatment of Islamic finance products by 17 December 2010. All submissions received were acknowledged. Copies of public submissions made to the Board are available from the Islamic Finance submissions page.
On 26 April 2010, the then Assistant Treasurer and the Minister for Financial Services, Corporate Law and Superannuation announced that the Board of Taxation would undertake a comprehensive review of Australia's tax laws to ensure that, wherever possible, they do not inhibit the expansion of Islamic finance, banking and insurance products.
This review arises from the report of the Australian Financial Centre Forum (AFCF) (which was released by the Government in January 2010) which recommended that the Board of Taxation undertake such a review "in order to ensure that Islamic finance products have parity with conventional products, having regards to their economic substance" (Recommendation 3.6).
On 18 May 2010, the then Assistant Treasurer announced the terms of reference for the Board's review. The Board has been asked to:
In conducting the review, the Board should have regard to the following principles as far as possible:
After considering the views of all stakeholders the Board is to provide a final report to the Assistant Treasurer by June 2011.
The Board has completed its review of the taxation treatment of Islamic Finance and provided its report to the Assistant Treasurer. In preparing its report the Board took into account the various submissions to the review and discussions with stakeholders and its expert panel.
The timing for release of the Board’s report to the public is a matter for the Government to decide. In line with past practice, it is expected that the report will be available at the time the Government releases its response to the report.
Further information on this review can be obtained from the Board of Taxation Secretariat on (02) 6263 4366.