A Strong Foundation
Discussion Paper
Establishing objectives,
principles and processes
November 1998


Submissions to the Review
Chapter 1: About the Review

Part I: The need for reform
Chapter 2: Illustrating a deficient foundation
Chapter 3: Exploring the problem of complexity
Chapter 4: Reviewing processes for policy, legislation and administration

Part II: Building a strong foundation
Chapter 5: Approaching the task of reform
Chapter 6: Establishing framework objectives and principles
Chapter 7: Reforming business tax processes
Chapter 8: Addressing specific issues in tax administration
The Way Ahead

Appendix A: Terms of reference
Appendix B: Treasurer's press releases
Appendix C: Background data on business income taxation
Appendix D: Australian Taxation Office consultative arrangements


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This is the first discussion paper issued by the Review of Business Taxation to enable those interested in the necessary reform of business taxation to participate in the process. Reforming the business tax system is critical to the future wellbeing of all Australians. Thus, how well we accomplish this task is vitally important.

The Government’s initiative in announcing A New Tax System has provided the opportunity to reform the system in a fundamental manner which we need to grasp firmly. We are at a watershed, as Australia faces the consequences of increasing globalisation of world economies with a tax system that is patently deficient, unnecessarily complex and seen to be working unfairly and inefficiently.

The Australian tax system can be likened to the leaning tower of Pisa. Adding another storey will not reduce the chance of collapse. It would only make it more certain. Like the leaning tower, the business tax system needs a sound and stable foundation before we can start the task of rebuilding.

One of the principal reasons for the widespread dissatisfaction with the current system is that it is not based on a coherent set of principles. The 1936 Act was developed in an Australian economy very different from today’s. This Act has been added to and patched largely in an ad hoc manner until it is no longer coherent and is not easily comprehended.

If we are to avoid perpetuating this situation we need to establish a sound foundation and a framework of coherent principles capable of adaptation to meet changing needs and policies without sacrificing the integrity of the system.

This is why we have separated the discussion of the objectives and principles of taxation and the related processes of policy development, legislation and administration from the particular policy issues we are required to address. The latter will be the subject of another discussion paper that will be issued by the Review early next year.

Our objective is to join with the various stakeholders in the tax system in agreeing on the kind of foundation on which a robust system can be built — a system that enhances the growth performance of the Australian economy, is equitable and efficient, and is as transparent and as simple as it can be made.

We wish to encourage debate and discussion and will be holding a number of seminars in the various capital cities as well as inviting submissions to help the Review come to its recommendations to Government.

We invite you to participate in this critical endeavour.

J.T. Ralph AO

Membership of the Review
Mr John Ralph AO (Chairman);
Mr Rick Allert AM; and
Mr Bob Joss.
The Secretary is Dr Alan Preston.

Submissions to the Review

Invitation for submissions

The Review has published this discussion paper to facilitate widespread community debate and discussion. The Review invites members of the community to make submissions relating to all matters raised in this paper which bear on its terms of reference. In particular, it welcomes comments on its proposed strategy for building a strong foundation for the business tax system as a necessary prerequisite to policy reform.

How to make a submission

Submissions on issues canvassed in this paper should be lodged by Thursday 31 December 1998 and addressed to:

The Secretary
Review of Business Taxation
Department of the Treasury
Parkes Place

Telephone: (02) 6263 4325 Fax: (02) 6263 4352

Each submission should clearly indicate a contact person and contact details. If the submission is more than five pages, please include an Executive Summary.

The Review requests that two hard copies be provided and, if possible, an electronic copy on IBM Compatible 3.5 inch floppy disk in Microsoft Word or Rich Text Format. Alternatively, submissions can be emailed to the Review (

The Review intends to treat submissions as public and may quote or publish the whole or part of your submission. You should clearly indicate if you would like all or part of your submission to be treated as confidential.

How to get copies of submissions

The Review intends to list all public submissions, and where possible the text of public submissions, on its website (

Organisations making submissions are asked to put in place arrangements to make copies of their submission available to interested parties. In the case of submissions by individuals, the Review will make the necessary arrangements.