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The government has announced it will provide the tax commissioner with a statutory remedial power to resolve unforeseen or unintended outcomes in the taxation and superannuation law.
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Govt grants tax commissioner new powers
05 May 2015
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Assistant treasurer Josh Frydenberg said the new powers will allow the commissioner to make a disallowable legislative instrument that will have the effect of modifying the operation of the taxation and superannuation law.
Mr Frydenberg said the new power has been designed to ensure the law can be administered to achieve its purpose or object.
“The power will be appropriately limited in its application and will only apply to the extent that it has a beneficial outcome for taxpayers,” he said.
"It will only be available where the modification is not inconsistent with the purpose or object of the law and has no more than a negligible revenue impact. The Commissioner will consult publicly prior to any exercise of the power.”
Chartered Accountants Australia New Zealand (CAANZ) has welcomed the announcement, calling it a step in the right direction for improving Australia’s tax system.
Lee White, chief executive of CAANZ, said the remedial power will allow the commissioner to provide greater certainty for taxpayers.
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“This will benefit individuals and the business community. This power would have been helpful in the past, where some of the announced but unenacted taxation measures created a burden and backlog for Parliament and which prolonged the uncertainty in the tax laws.
“The statutory remedial power will build in the necessary flexibility to make the tax system more agile and responsive where the words in the law produce unintended outcomes that are contrary to the original intent. This should enhance productivity within the tax system.”
However, the Tax Institute was less complimentary of the changes. The institute’s president, Stephen Healey, said he has reservations regarding its operation in practice.
“The essence of the power is pragmatism and that should not be lost in its administration,” Mr Healey said.
“The power is based on sound principles of building certainty, reducing complexity and achieving timely resolution of unintended tax outcomes. Those principles should be front of mind when the power is implemented, and appropriate safeguards should be built in to its exercise.”
“In an ideal tax system, such a power would not be required because tax legislation would be clear, timely and consistent with its policy intent. The mere existence of the power should not encourage complacency on the part of Government when it comes to legislating tax measures.”
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