23 December 2009 - Government Receives the Australia's Future Tax System Report 
 
The Treasurer, The Hon Wayne Swan MP, has today announced that he has received the report from the Australia's Future Tax System review team.  
 
He said that the Government will consider the review and release it in early 2010, along with an initial response, and will not be engaging in speculation about the contents of the report before that time.  
 
15 October 2009 - Special business consultation meeting with Dr Ken Henry and other AFTS Panel members 
 
The Institute's Tax Counsel, Yasser El-Ansary, joined around 20 business group representatives at a specially-convened roundtable meeting with the Chair of the Australia's Future Tax System (AFTS) Review, Dr Ken Henry, along with fellow panel members, Greg Smith and Heather Ridout. The objective of the meeting was to provide business groups with an understanding of the likely 'direction' of the review's recommendations in the run-up to the conclusion of the 18-month review over the coming weeks. 
 
The two hour discussion did not get into specific reform initiatives as some of the final positions are still being concluded by the Review Panel. However, in an attempt to provide business groups with an understanding of the most likely direction of the recommendations, Dr Henry spelled out the following interesting points:

• The Australian taxation system whilst complex, and in many places in need of repair, it is not fundamentally 'broken'
 

• It is unlikely any radical changes to the company income tax system will be recommended, especially in light of massive transitional costs for business
 

• No compelling reason has been identified to move away from the current system of dividend imputation
 

• Reform to the treatment of losses (such as tax loss carry-back) may be recommended, but there could be some practical constraints
 

• Rent taxes, especially in the resources sector, have come in for close scrutiny to ensure they deliver an appropriate return on the Australian community's assets
 

• 'Distortions' in the tax system are difficult to measure but there is a strong case to revisit and justify the existence of certain tax concessions over time if they are to be retained
 

• Base broadening and greater reliance on consumption-type taxes are economically desirable, however such a move could result in inequitable outcomes for some in the community
 

• Abolition of many small and inefficient taxes (including many at state government level) must occur if Australia is to achieve a more efficient and simpler tax system and better address vertical-fiscal imbalance between the States and the Commonwealth.

• Which parts of the tax and transfer system are working well; and
 

• What they would most like to see change.

• The revenue mix – many business submissions, and others, call for a reduction in taxes on capital income, particularly corporate taxes.
 

• Personal tax and transfers – a number of submissions call for greater progressivity in the tax system (through higher marginal rates for high income earners). Others argue that high personal marginal tax rates reduce incentives for skills acquisition and the ability for Australia to attract and retain high skilled workers. Some also suggest that the top personal tax rate should align with the company tax rate to reduce incentives for tax minimisation.
 

• The retirement income system – many submissions propose changes while supporting the three pillars system. Examples of suggested changes are increasing the level of compulsory saving and altering the way the pillars are integrated.
 

• Taxing business and investment – the key theme of most business submission is the need to promote international tax competitiveness. Submissions drew on world-wide reductions in capital income taxation, citing the steady decline in OECD’s company and withholding tax rates.

• analyse Australia’s taxation of capital income regime and assess whether Australia has the right incentives for individuals to provide for their future and to provide capital to businesses
 

• consider a reduction in the corporate tax rate from 30 per cent to the aspirational goal of 20 per cent, with an interim 25 per cent rate
 

• examine whether Australia’s dividend imputation system can be improved
 

• further evaluate alternative corporate tax systems in the Australian context - such as:
  • the allowance for corporate equity
   
  
  • the shareholder allowance for corporate equity
   
  
  • the allowance for shareholder equity
   
  
  • a dual income tax system
• seek to achieve greater leveraging off existing reporting systems
 

• consider the tax implications of other capital market reforms.