Senate

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

CHANGE OF TITLE - TAX LAW IMPROVEMENT BILL (No. 1) 1998 - SENATE - Explanatory Memorandum.

Chapter 1 - About the Tax Law Improvement Project

Overview

This chapter outlines the genesis and role of the Tax Law Improvement Project and its progress to date.

About the Tax Law Improvement Project

In November 1993, the Joint Committee of Public Accounts published a report recommending the setting up of a broadly based Task Force to rewrite the income tax law. In the following month, the Australian Government announced the Tax Law Improvement Project.

Scope of the project

This is a project to restructure, renumber and rewrite in plain language Australia's income tax law. It aims to improve taxpayer compliance, and reduce compliance costs, by making the law easier to use and understand.

It is not intended as a policy review, but there is scope to make minor content changes to aid the rewriting. These can reduce or eliminate unnecessary complexity in the law, and bring the law closer into line with administrative and commercial practice.

Progress to date

The first two instalments of the rewrite of the income tax law, the Income Tax Assessment Act 1997 (1997 Act) as amended by the Tax Law Improvement Act 1997 , have operated since the beginning of the 1997-98 income year to express the law in the clearer structure, plainer language and more helpful style developed by the Tax Law Improvement Project.

The ATO, tax profession, tertiary education sector and the community have now invested the time and resources in acquainting themselves with the changes in presentation, structure and style of the 1997 Act. The very real benefits flowing from the clarity and accessibility of the rewritten law are already apparent and are reflected in feedback on the new law from working tax professionals.

This Bill, the Tax Law Improvement Bill (No. 2) 1997, is the third instalment of rewritten law produced by the project and will operate from the beginning of the 1998-99 income year. With its enactment, the 1997 Act will comprise key areas of the law having broad application to taxpayers including the basic provisions relating to core concepts of the income tax law (assessability of income and deductions), the Capital Gains Tax provisions and capital allowances such as depreciation and those relating specifically to land-holders.

These three instalments of the rewrite already provide a sound platform for tax reform. Pruned of its linguistic excesses, and readable by its audiences for the first time in decades, this new income tax law is primed for detailed policy analysis.