The terms of reference were announced by the Treasurer, the
Hon. Peter Costello MP on 14 August 1998, and amended on
27 October 1998 and 2 and 17 June 1999.
Business taxation is concerned with taxing investments in physical and financial assets
(and their financing) and the collective vehicles or 'entities' through which these
investments can be made.
The Review will pursue the strategy specified in A New Tax System of
consultation on the framework of reform of business entities and on the extent of
reform of business investments recognising the current problems and objectives for
business tax reform identified in A New Tax System. The process of consultation
will include an assessment of the design and the administration of the tax regimes
affecting business to identify their main shortcomings and their impediments to productive
activity and innovation.
The Review will make recommendations on the fundamental design of the business tax
system, the processes of ongoing policy making, drafting of legislation and the
administration of business taxation.
The recommendations will be consistent with the aims of improving the competitiveness
and efficiency of Australian business, providing a secure source of revenue, enhancing the
stability of taxation arrangements, improving simplicity and transparency and reducing the
costs of compliance. The Review will adopt a comprehensive approach to reform driven by
clear, sound principles involving a move towards greater commercial reality.
The Review of business taxation arrangements will be open and transparent.
Mr John Ralph, AO, will chair the Review.
The Review will be able to call on the expertise of both the public
and private sectors and academic tax experts.
The Review is to report by 31 March 1999 to allow a reasonable time
period for consultation with the business community, to allow draft legislation to be
subject to consultative input from business and for the legislation to have effect from 1
1. The Review will report on the state of the current arrangements relating to business
This will involve reporting on:
(a) the Australian business taxation system as a whole compared with international
(b) the structural flaws in the broad design of business tax arrangements and the
degree to which existing business tax systems bias and impede business decisions;
(c) the degree to which the current business tax arrangements meet the aims of
certainty of taxation treatment, clarity of law, ease of administration and low compliance
(d) the administration of taxation, including the drafting of legislation and technical
corrections to legislation and the adequacy of existing procedures for consultation
between the taxation authorities and the business community.
2. The Review will make recommendations about the fundamental re-design of business tax
arrangements. While no aspect of the taxation of business entities and investments should
be precluded from the scope of the review, consultations by the Review and associated
recommendations will be directed to the strategy for reform spelt out in A New Tax
3. The Review will examine:
(a) in relation to business entities, the re-designed company tax arrangements
proposed to apply to companies, trusts, cooperatives, limited partnerships and life
insurers - including a move towards consolidated group taxation and the achievement of a
consistent treatment of distributions of profit and contributed capital;
(b) in relation to business investments, the extent of reform in the areas of
physical assets, financial assets/liabilities and intangibles and the potential use of
accounting principles, taking into account the following considerations -
(i) the need to encourage business development with an internationally competitive tax
treatment of business investments;
(ii) the potential benefits of bringing tax value and commercial value closer together;
(iii) the goal of moving towards a 30 per cent company tax rate;
(c) in relation to capital gains tax (CGT), the scope for:
capping the rate of tax applying to capital gains for individuals
at 30 per cent;
extending the CGT rollover provisions to scrip-for-scrip
(d) the Review will need to achieve overall revenue neutrality in respect of (b) and
(c) with these changes.
4. The Review will make recommendations concerning the question of consultative input
from the business community into the ongoing processes of policy design, drafting of
legislation and the administration of taxation.
5. The Review will make recommendations concerning possible improvements in the
administration and the accountability of the taxation authorities in relation to business
|27 October 1998
||The Treasurer announced the date for reporting had been extended to 30 June 1999.
||The Treasurer announced the appointment of Mr Bob Joss, then CEO of Westpac
Banking Corporation, and Mr Rick Allert, AM, Chairman of Southcorp, to assist Mr John
Ralph, AO in undertaking the Review.
|22 February 1999
||The Treasurer announced that cash management trusts and, in principle, other
collective investment vehicles would be subject to `flow-through' taxation. This issue was
to be further considered by the Review.
||The Treasurer also announced that the Government would address potential exploitation
opportunities before implementation of the business tax reform measures. The Government
proposed action with effect from 22 February, with details to be announced having
regard to the Review's final recommendations.
|2 June 1999
||The Treasurer referred for the Review's consideration the merits of a 20 per cent
alternative minimum company tax and measures to limit the use of company structures for
|17 June 1999
||The Treasurer announced the date for reporting had been extended to 30 July 1999.