Submission No. 30 Back to full list of submissions
Download in either PDF or RTF format


6 April 1999


Dr Alan Preston
The Secretary
Review of Business Taxation
Department of The Treasury
Parkes Place


Dear Alan

"A Platform for Consultation" - Submission

I am pleased to enclose two hard copies of our submission together with an electronic copy on disk. We are also sending a copy of this letter and the submission to you by email.

You will see that our submission covers Chapters 15 to 33. These chapters cover the areas which are most germane to our practice and upon which we feel best qualified to comment.

You will also see that our submission adopts the "checklist" approach which we have promoted since our meeting on 4 March 1999. The checklist for each chapter is supported by backing notes, where relevant; and each of the three groups of chapters is introduced by an Executive Summary.

If you or any member of your team would like to discuss any aspect of our submission, please do not hesitate to contact us on (03) 9650 4451.

Yours sincerely


Richard Shaddick

RS/cs: 010499 Response Covering Letter.doc: TRW


Review of Business Taxation


Submission in Response to Chapters 15 to 33 of

"A Platform for Consultation"

The Second Discussion Paper issued by the Review of Business Taxation

6 April 1999


Executive Summary

Chapters 15 to 24 raise a large and varied number of issues regarding the taxation of entities. Although we have not provided a written submission on all issues raised, we have provided our views in the attached checklist.

The major points we wish to reinforce in regard to the taxation of entities are as follows:

  • We prefer the adoption of Option 3 for the introduction of full imputation being the taxing of unfranked inter-entity distributions. We believe this option offers simplicity in administration, avoids the difficulties for non-residents which may otherwise arise and minimises some of the adverse consequences of full imputation.
  • Of the options proposed by the Review of Business Taxation ("Review") for the treatment of inter-entity distributions, the inter-entity dividend rebate is the least offensive.
  • However, we do not believe that relief via the inter-entity dividend rebate is the best treatment for inter-entity distributions. We prefer as alternatives a similar treatment for entities as exists for individuals or the introduction of a dividend deduction regime.
  • We believe the proposed reforms to the taxation of capital distributions are misguided and will be ineffective. We recommend that the Review consider the submissions made prior to the introduction of Taxation Laws Amendment (Company Law Review) Act 1998. We believe that notwithstanding the introduction of a profits first rule and slice approach, there will continue to be transactions undertaken to stream franking credits and capital benefits.
  • We do not envisage any possibility for the repeal of the existing anti-avoidance provisions which deal with company distributions. We further envisage that additional anti-avoidance provisions may be required to deal with the weaknesses inherent in the profits first rule and slice approach.
  • We believe that the taxation of entities does not fully address fundamental policy issues such as taxation of comprehensive income, the treatment of risk and the concept of neutrality. It is our view that the proposals made in regard to the taxation of entities violate the general principles expressed by the Review in regard to these issues.


The full submission is available to download in either
PDF or RTF format.