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Post-Implementation Review of Division 7A of Part III of the Income Tax Assessment Act 1936

On 4 June 2015, the Government announced the release of the Board’s report [PDF 1.26MB | DOC 427KB] on its post-implementation review of Division 7A of Part III of the Income Tax Assessment Act 1936.

Background

On 18 May 2012, the then Assistant Treasurer announced that the Board would undertake a post-implementation review of Division 7A of Part III of the Income Tax Assessment Act 1936, which was to be completed by 30 June 2013.  On 8 November 2013 the Assistant Treasurer announced an extension  to these terms of reference and extended its reporting date to 31 October 2014.

Extended Terms of Reference

The Board of Taxation is currently undertaking a post-implementation review of Division 7A of Part III of the Income Tax Assessment Act 1936 (Division 7A).

Division 7A contains integrity provisions designed to prevent shareholders (or their associates) of private companies from inappropriately accessing the profits of those companies in the form of payments, loans or debt forgiveness transactions.

Division 7A is part of a broader tax framework in which private business structures operate.  Within this context the Board should:

The Board’s report should take account of the revenue implications of various options and, where appropriate, suggest approaches that minimise any revenue cost.

In undertaking this review the Board should seek public submissions and consult widely.

The Board should report to the Government by 31 October 2014.

Discussion papers

On 20 December 2012 the Board of Taxation released its first discussion paper on the post-implementation review of Division 7A of Part III of the Income Tax Assessment Act 1936.

On 25 March 2014 the Board of Taxation released its second discussion paper on the post-implementation review of Division 7A of Part III of the Income Tax Assessment Act 1936.

The Chair of the Board of Taxation, Mrs Teresa Dyson, announced the release of the second discussion paper [PDF 1.19MB | DOC 723KB] via a press release. The Board developed this second discussion paper to invite submissions and facilitate stakeholder consultation on the issues raised in accordance with the extended terms of reference given for the review. The Board requested that submissions be made by 9 May 2014.

Consultation process

In undertaking this review, the Board consulted widely to provide all stakeholders with the opportunity to participate in the review. The Board received 19 submissions on the first discussion paper, including three confidential submissions and 18 submissions on the second discussion paper, including three confidential submissions.

The Board appointed a working group of its members comprising Mr Curt Rendall (Chair of the working group), Mr Keith James and Ms Elizabeth Jameson to oversee this review.

Board’s report

The Board has completed its post-implementation review of Division 7A and provided its report to government on 12 November 2014.

Further information on this review can be obtained from Nick Seal (02 6263 4369) at the Board of Taxation Secretariat.

Submissions received

SubmitterDownload
Adrian Abbott61KB
Arnold Bloch Leibler269KB
Arnold Bloch Leibler - Letter 10 August 2012310KB
BDO Australia Ltd132KB
BDO Australia Ltd330KB
CPA Australia Ltd82KB
Ernst & Young134KB
Ernst & Young172KB
Greenoak Advisory Pty Ltd318KB
Hayes Knight (NSW) Pty Ltd739KB
Institute of Chartered Accountants Australia - Part 11006KB
Institute of Chartered Accountants Australia - Part 2276KB
Institute of Public Accountants309KB
Institute of Public Accountants208KB
Law Council of Australia Business Law Section130KB
Law Council of Australia Family Law Section226KB
Moore Stephens99KB
Pitcher Partners596KB
PriceWaterhouseCoopers318KB
The Tax Institute221KB
The Tax Institute - Appendix A506KB

Submissions received - Second round

SubmitterDownload
BDO101KB
BusinessSA81KB
Cleary Hoare Solicitors433KB
CPA Australia234KB
Family Business Australia and KPMG64KB
Halperin & Co57KB
Institute of Chartered Accountants Australia402KB
Institute of Public Accountants221KB
Institute of Public Accountants10MB
Ken Mansell145KB
Ken Mansell41KB
Koustas & Co264KB
Laird Advisory Services2MB
Law Council of Australia279KB
Mark Leibler – Arnold Bloch Leibler126KB
Pitcher Partners579KB
PwC137KB
The Law Society of New South Wales Young Lawyers Taxation Law Committee5MB
The Tax Institute115KB

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