Shorten's retrospective tax law criticised
Business taxpayers are concerned about being retrospectively penalised for complying with previous tax laws, according to the Institute of Chartered Accountants in Australia.
These concerns have been raised following the Assistant Treasurer Bill Shorten's announcement of major changes to the tax treatment of the residual tax cost setting and rights to future income rules, which the government said would help return the Federal Budget to surplus in 2012/13.
The changes would reduce deductions available to taxpayers under the operation of the consolidations regime that was originally introduced in 2002.
However, the institute's tax counsel, Yasser El-Ansary has criticised the retrospective tax law changes, claiming such laws should only be used in extraordinary circumstances where genuine integrity risks exist.
"Retrospective laws should not be used to correct policy deficiencies in the tax system or shortfalls in budget revenues," El-Ansary said. "We need to recognise that every retrospective law change puts another dent in the perception of Australia's brand in the international marketplace."
El-Ansary named amendments to the petroleum resource rent tax (PRRT) as an example of retrospective tax laws.
"Changes to the PRRT regime will result in a back-dating of the tax law to 1990, while the government has proposed enacting seven-year retrospective transfer pricing legislation which has the potential to raise billions in additional tax revenues from multinational organisations," the institute stated.
AUTHOR
Milana Pokrajac
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