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Executive summary
The Board has identified a substantial number of inoperative provisions in the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. These provisions could be repealed without changing the effect of the law.
Board stakeholders, including tax practitioners and the two main tax publishers, support the Board’s work in this area which is aimed at ‘uncluttering’ and improving the ease of use of the income tax law, contributing to the reduction of complexity and compliance costs.
Appendix 2 to this report identifies an estimated 2,135 pages of inoperative provisions in the Attorney-General’s Department’s Scaleplus version of the 1936 and 1997 Acts (overwhelmingly located in the 1936 Act) that could be repealed subject to the Government’s legislative processes and the outcome of any public consultation on the provisions that the Government considers appropriate.
- This represents around 44 per cent of the Scaleplus version of the 1936 Act and 28 per cent of the same version of the two Acts combined.
A number of the provisions identified in Appendix 2 will require consideration by the Government of possible legislative amendments to facilitate repeal, or of consequential amendments as a result of repeal.
The two main tax publishers have advised that they would move repealed provisions from their annual publications to a less frequently published hard copy or on-line archive volume.
The Board has undertaken a rigorous process to ensure, as far as possible, that operative provisions are not incorrectly repealed with unintended consequences for taxpayers or the revenue. This process has involved:
- contracting a highly qualified expert, Mr Tom Reid, to identify probable inoperative provisions in the two Acts;
- contracting the Australian Taxation Studies Program (Atax), which is part of the Law Faculty of The University of New South Wales, to:
- check that there would be no unintended consequences if the inoperative provisions identified by Mr Reid were repealed; and
- check cross references in other Commonwealth legislation (including regulations) to the inoperative provisions to ensure they do not cause the inoperative provisions to have continuing effect;
- contracting SoftLaw Corporation Limited (now RuleBurst Limited) to identify these cross references using proprietary software;
- subsequent consideration by Atax and Mr Reid to agree a view on provisions that would be suitable for repeal and those that should be retained; and
- appointing a Reference Group of high level experts to undertake sample checking of some of Atax’s results and provide advice on selected issues.
Despite the Board’s processes, it remains possible that the repeal of some provisions could lead to unintended consequences, essentially reflecting the complexity of current law that has built up over many years. There may therefore be benefit in the Government undertaking further processes — for example public consultation — to reduce as far as possible the risk of such unintended consequences.
The Board notes that section 8 of the Acts Interpretation Act 1901 preserves the past operation of repealed legislative provisions. The Board also recommends in this report the development of appropriate savings provisions to enable the application of a repealed provision to be restored, if necessary, to address any unintended consequences, and to ensure that repeal of an inoperative provision would not affect the operation of a provision of any Act that depends on the repealed provision.
- Specific savings provisions could also be considered during the legislative development phase if the Government decides to proceed with repeal.
The ex officio members of the Board — the Secretary to the Treasury, Dr Ken Henry, the Taxation Commissioner, Mr Michael Carmody AO, and the First Parliamentary Counsel, Mr Peter Quiggin — reserved their final views on the issues canvassed in this report for advice to the Government.
Recommendations
Recommendation 1
The Board has identified an estimated 2,135 pages of inoperative provisions of the Attorney-General’s Department’s Scaleplus version of the 1936 and 1997 Income Tax Assessment Acts. These provisions are listed at Appendix 2 to this report.
The Board recommends that these provisions be repealed and the tax publishers be asked to move repealed provisions of the two Acts from their annual publications into less frequently published hard copy or on-line archive volumes.
Recommendation 2
The Board recommends that, prior to repeal, appropriate checking and legislative development be undertaken as part of the Government’s usual legislative process.
Recommendation 3
The Board recommends that the Government also consider undertaking a process of public consultation on an exposure draft Bill to repeal the identified inoperative provisions.
Recommendation 4
The Board recommends that the Government consider developing appropriate savings provisions to enable the application of a repealed provision to be restored, if necessary, to address any unintended consequences, and to ensure that repeal of an inoperative provision would not affect the operation of a provision of any Act that depends on the repealed provision.