Chapter 1: Background

1.1 As indicated in its 2002-03 and 2003-04 annual reports, the Board has been undertaking work to develop options for Ministers aimed at rationalising the 1936 and 1997 Income Tax Assessment Acts.

1.2 The Board’s purpose is to see whether there is a relatively straightforward option to reduce the volume of tax legislation and improve its ease of use for taxpayers, their advisers, and those involved in tax administration. This could also provide a better platform for amendments to be made in the normal course.

1.3 The work had its origin in the Board’s earlier consideration of the Tax Value Method1 and, in particular, the idea of exploring with key stakeholders the scope for making improvements to the current income tax law in a context of merging the two present Acts.

1.4 The Board has examined a number of merger options in consultation with tax practitioners and other stakeholders, including the two main commercial publishers of tax legislation. It has also had the benefit of advice from members of its Advisory Panel.

1.5 At this stage, however, the Board does not consider that there is a broad consensus among stakeholders on the form any such merger could take. The Board recognises that any such recommendation would need the support of tax practitioners, who would be the main beneficiaries of any change in this area, but who also would bear any transitional costs.

1.6 As part of this work, the Board engaged a consultant in 2004 to identify the inoperative provisions of the two Acts. It became evident that, even in the absence of a merger, there was potential for substantial savings in the volume of published income tax legislation if the inoperative provisions of the two Acts could be identified and repealed.2

1.7 These provisions are nearly all located in the 1936 Act, reflecting a drafting philosophy and practice of cutting off rather than repealing inoperative provisions.3 The small number of inoperative provisions in the 1997 Act reflects the current drafting approach which is to repeal, rather than cut off, no longer operative provisions.

1.8 Board stakeholders, including tax practitioners and the main tax publishers, support the identification, repeal and separate publication of identified inoperative provisions. They would see this as a significant enhancement in terms of ‘uncluttering’ and improving the ease of use of the law by reducing the volume of annually printed income tax legislation and making navigation of electronic versions of the Acts easier.

  • Currently, it can be difficult for a user to determine whether a provision produced by an electronic search is operative or inoperative.

1.9 The Board considers that the repeal and separate publication of the inoperative provisions would also contribute to the reduction of complexity and compliance costs of the tax law.

  1. ‘Evaluation of the Tax Value Method’, A Report to the Treasurer and Minister for Revenue and Assistant Treasurer, July 2002, available on the Board’s website at
  2. The extent of these savings relies significantly on decisions of the tax publishers to move repealed provisions into less frequently published archive volumes. Their current practice is to retain repealed provisions in the body of their published volumes for a number of years, albeit in a smaller font size. This issue is discussed in Chapter 3. 
  3. A provision is ‘cut off’ where it is not removed from the legislation but an amendment stops it applying, for example, after a particular time or income year. This drafting practice facilitated access to cut off provisions that had some residual operation, although at the expense of cluttering the law with inoperative material.