Report - Provisions of the taxation laws amendment Bill (No. 2) 1997
Membership of the Committee
Senate Economics Legislation Committee
Core Members
Senator Alan Ferguson (Chairman) |
(Liberal Party - SA) |
Senator the Hon. Nick Sherry (Deputy) |
(Australian Labor Party - TAS) |
Senator Grant Chapman |
(Liberal Party -SA) |
Senator the Hon. Peter Cook |
(Australian Labor Party - WA) |
Senator Andrew Murray |
(Australian Democrats - WA) |
Senator John Watson |
(Liberal Party - TAS) |
Senator Crane substitutes for Senator Watson on matters
covered by the Industrial Relations portfolio.
Participating Members
Senator E. Abetz |
(Liberal Party - TAS) |
Senator M. Bishop |
(Australian Labor Party - WA) |
Senator R. Boswell |
(National Party of Australia - QLD) |
Senator B. Brown |
(Australian Greens - TAS) |
Senator B. Childs |
(Australian Labor Party - NSW) |
Senator B. Collins |
(Australian Labor Party - NT) |
Senator J. Collins |
(Australian Labor Party - VIC) |
Senator M.
Colston |
(Independent - QLD) |
Senator S. Conroy |
(Australian Labor Party - VIC) |
Senator B. Cooney |
(Australian Labor Party - VIC) |
Senator J. Faulkner |
(Australian Labor Party - NSW) |
Senator B. Harradine |
(Independent - TAS) |
Senator K. Lundy |
(Australian Labor Party - ACT) |
Senator S. Mackay |
(Australian Labor Party - TAS) |
Senator D. Margetts |
(WA Greens - WA) |
Senator B.J. Neal |
(Australian Labor Party - NSW) |
Senator K. O'Brien |
(Australian Labor Party - TAS) |
Senator C. Schacht |
(Australian Labor Party - SA) |
Secretary
Mr Robert
Diamond
SG.64, Parliament House
Canberra ACT 2600
Tel: (06) 277 3540
Fax: (06) 277 5719
Research Officer: Merrilyn Pyle
Background to the inquiry
The Taxation Laws Amendment Bill (No.2) 1997 was introduced
in the House of Representatives on 13 February 1997 with the second reading
adjourned on the same day. On 6 March 1997 the Senate Selection of Bills Committee
Report No. 4 of 1997 referred provisions of the Bill to the Economics
Legislation Committee for examination and report by 30 May 1997.
As reasons for referral of the Bill, the Selection of Bills
Committee Report stated the Committee should:
"Inquire into schedule 2 of the Bill as to whether it
goes far enough in ensuring that fair tax is being paid in relation to
non-resident, dividend and royalty withholding tax, (and) whether schedule 5
opens possible new areas of tax avoidance in this regard."[1]
As listed in appendix 1 to this report, the Committee
received six submissions in respect of the Taxation Laws Amendment Bill (No.2)
1997. The Committee regrets the submissions arrived too late in the inquiry
process for a public hearing to be conducted.
Effect of the Bill
[2]
The Taxation Laws Amendment Bill (No.2) 1997 amends taxation
legislation to give effect to a number of 1996-97 Budget measures designed to
prevent tax avoidance and address abuse of certain tax provisions and anomalies
in the tax law.
The Bill also amends the interest withholding tax provisions
as announced by the Treasurer in June 1996 in an effort to inject further
competition into the Australian financial market and, in particular, the home
lending market and update the provisions to reflect current overseas financial
arrangements. Accordingly, the Bill proposes amendments in the following areas:
Amendments related to net capital losses
Amends Part IIIA of the Income Tax Assessment Act 1936
to ensure that:
- net capital losses will attach to the year of income in which
they are incurred and are recouped or transferred within a company group in the
order in which they are incurred; and
- where a net capital loss is transferred within a company group,
the transferee company is required to satisfy the same recoupment tests (for
example, the continuity of ownership test or the same business test) that apply
to the transferor company.
Withholding tax avoidance
Amends the withholding tax provisions and Part IVA of the
income tax law to:
- extend the general anti-avoidance provisions of the Act - Part
IVA - so that they apply to non-resident interest, dividend and royalty
withholding tax;
- address arrangements which attempt to convert an interest income
stream into another income form which it is argued is not 'interest' or 'in the
nature of interest';
- impose withholding tax where royalties are derived by a resident
in similar circumstances to those by which interest is subjected to withholding
tax under subsection 128B(2A) of the Act;
- ensure that withholding tax is payable where tax exempt bodies
are interposed between an Australian resident payer and a non-resident
recipient; and
- remove any doubt that the withholding tax provisions apply to
dividends paid out of capital reserves.
Dual resident companies
Amends the provisions of the Income Tax Assessment Act
1936 in respect to certain dual resident companies (and non-individual
entities that are treated as companies) to deny specified benefits that are
available in respect to resident companies and ensure the application of
specified anti-avoidance measures that are targeted at non-resident companies.
Removal of standard superannuation contribution limit
This measure removes the right of employers to elect to use
a standard contribution limit to calculate the upper limit of deductions
allowable in relation to superannuation contributions they make for the benefit
of their employees. To calculate the upper limit all employers will be
required to use their employees' age based limits.
Interest withholding tax and related provisions
Amends the interest withholding tax provisions of the Income
Tax Assessment Act 1936 (the Act) to:
- extend the section 128F exemption to wholesale borrowings by
Australian companies by replacing the existing wide distribution test with a
public offer test;
- repeal the use of funds in an Australian business requirement in
the existing section 128F;
- restrict the section 128F non-resident borrowing subsidiary
exemption to subsidiaries resident in countries listed in the Income Tax
Regulations;
- provide that the section 128F exemption will not be available if
the company pays interest to an associate where the company issuing the
debentures is aware or should have been aware that the interest was paid to an
associate; and
- introduce self assessment procedures for claiming the section
128F exemption.
Amends the income tax provisions of the Act to prevent an
income tax deduction being claimed in respect of interest which is subject to
interest withholding tax where the tax has not been deducted from the interest
payment.
Amends the bearer debenture tax provisions of the Act to:
- provide an exemption for bearer debentures issued by an Offshore
Banking Unit; and
- subject interest in relation to bearer debentures which are
issued overseas by an Australian company and where interest is paid overseas,
to taxation under the interest withholding tax provisions.
Amends the foreign bank branch provisions (Part 111B) of the
Act to define the term 'interest' as having the same meaning as in the interest
withholding tax provisions.
Amends the Income Tax (Bearer Debentures) Act 1971 to
restrict the rate of tax to the top marginal rate.
Amends the Financial Corporations (Transfer of Assets and
Liabilities) Act 1993 to ensure that it will deal with the transitional
period in relation to the section 128F interest withholding tax exemption.
Leases of luxury cars
Inserts a new Schedule into the income tax law that provides
a legislative framework for the taxation treatment of leases of luxury cars.
The lessor is treated as having loaned the lessee the money to acquire the
car. The lessor is taxed on the finance charge component of the lease
payments, but not the lease payments themselves. The lessee is able to deduct
the finance charge component of the lease payments, but not the lease
payments. The lessee is also treated as the owner of the car entitled to
relevant depreciation deductions.
Issues Raised in Evidence
Schedule 2 - Amendment of the Income Tax Assessment
Act 1936:
Withholding tax avoidance
General concerns
In considering proposed changes to withholding tax
arrangements the Australian Owned Companies Association submit that the
underlying philosophy for a withholding taxation system should embody the
tenets:
- That there is fairness and that those who get a benefit or incur
costs should be required to contribute at a reasonable rate in return for the
benefit received or for the costs incurred.
- That Australian citizens, investors and shareholders should not
be at a disadvantage in comparison to foreign investors and shareholders. What
is contributed to the ATO should be at the same maximum rate for both
Australian and foreigner.
- That Australia has an urgent need for more overseas investment
earnings as dividends, and incentives should be given to encourage this.[3]
In the context of these principles the Australian Owned
Companies Association advocates an increase in the rate of withholding tax so
that foreign investors contribute at the same rate as Australian investors.
The Association bases its recommendation on the fact that "..by having nil
or low levels of withholding tax the Australian Government is subsidising the
Treasuries of major investing countries such as Japan, USA, UK and
Germany."[4]
In contrast to the position of the Australian Owned
Companies Association, Coopers and Lybrand submits that the withholding tax
liability effectively is borne by the Australian individual or business making
the payment. In support of this view, Coopers and Lybrand refer to "gross
up" clauses whereby the payer is required to pay the non-resident party an
amount which, after deducting any Australian withholding tax, gives the
non-resident party its required return. Coopers and Lybrand believes that
"Australian businesses would not be able to attract foreign investment or
other funds without the presence of such gross up clauses.[5]
Definition of "interest" for withholding tax
purposes
Item 1 of Schedule 2 to the Bill proposes amendments to the
definition of "interest" in section 128A of the Income Tax
Assessment Act 1936. The proposed changes will substantially broaden the
category of payments which will be subject to interest withholding tax, and
were widely criticised in evidence to the Committee. A number of groups
including the Taxation Institute of Australia, Arthur Andersen and Coopers and
Lybrand warn that there is significant risk that the amendments could apply to
a wide range of genuine financial market transactions, for example, interest
rate swap agreements (including cross currency swap agreements), forward
exchange rate agreements, caps, collars, floors and options which are widely
recognised as not being subject to withholding tax.
The Taxation Institute of Australia specifically noted the
areas of repurchase agreements and factoring arrangements as likely to be
inappropriately subject to the proposed new definition of interest. The
Institute condemned this probable outcome, submitting that neither repurchase
agreements nor factoring arrangements are entered into for the purposes of
avoiding withholding tax. Factoring arrangements, for example, are entered into
for financial advantages (ie including lower financing costs and cash flow
advantages).[6]
In summary, the Taxation Institute of Australia submitted
that the intention of the proposed changes is to prevent arrangements which
have the effect of avoiding interest withholding tax by converting interest
into some other form of payment which would not attract interest withholding
tax. However, in the Institute's view, the proposed changes in the Bill do not
reflect such an intention and if enacted are likely to create substantial
uncertainty in the financial and derivatives markets. In support of this view,
Coopers and Lybrand suggests the Committee rejects proposed section 128(1AB)
and propose an alternative amendment to ensure that genuine financial market
transactions entered into in the normal course of a financial institution's
business are not adversely affected.[7]
Following representations made to the government, the
Committee notes that the government may proceed with some technical amendments
concerning the definition of interest in respect of withholding tax.
Retrospectivity of proposed Schedule 2 amendments
Item 19 of Schedule 2 to the Bill provides that the proposed
amendments concerning withholding tax avoidance would apply from the Budget
night on which they were announced, namely 7:30pm, 20 August 1996. The proposed
retrospectivity was widely condemned in evidence to the Committee, given its
disregard for when a transaction may have been negotiated and thus likelihood
of imposing withholding tax where there was no expectation a liability would
arise.
The Taxation Institute of Australia comments the
retrospectivity "...is particularly harsh and unreasonable because the
proposed amendments to Part IVA (of the Income Tax Assessment Act 1936)
are intended to expand the scope of Part IVA and not to merely remove any doubt
or uncertainty about the application of the existing provisions of Part
IVA."[8]
The Corporate Tax Association adds that the transactions likely to be affected
"..typically involve the offshore financing of major capital assets (eg
ships, aircraft, major plant items) by Australian companies striving to be
internationally competitive. Withholding tax on such international funding
arrangements is never borne by overseas lenders and invariably results in an
additional tax burden on Australian borrowers."[9]
In further opposition to the retrospectivity of proposed
amendments Coopers and Lybrand submit that given Part IVA is a purpose based,
anti-avoidance provision it is inappropriate for the amendments to apply
retrospectively. In accordance with this, the Committee was encouraged to
recommend that the application date for the proposed amendments to Part IVA be
amended to apply to schemes (ie defined in section 177A to include agreements,
arrangements etc.) entered into after 20 August 1996 (the date of the
announcement) or 13 February 1997, being the date on which the Bill was introduced
in Federal Parliament.[10]
Alternatively, the Corporate Tax Association suggested that a
"grandfathering" period of possibly three years following Royal
Assent be granted, during which affected taxpayers could re-structure their
existing arrangements in accordance with the proposed new laws.
Part IVA: Reasons for no grandfathering
The Committee has received submissions in relation to
grandfathering of the proposed measures dealing with withholding tax avoidance
(including in relation to new subsection 128B(2C)) and the extension of Part
IVA of the Income Tax Assessment Act 1936. These submissions point out
that the measures will apply to payments made after the 1996-97 Budget even
where the payments are made in relation to contracts entered into before that
date.
The Government considers that where it believed tax
avoidance practices are being addressed, grandfathering of the anti-avoidance
provisions may provide an indication to taxpayers that new avoidance
arrangements can be entered into without the risk of being caught by any
legislative response.
Specific anti-avoidance measures in relation to offshore
permanent establishments
In relation to the specific amendments in new subsection
128B(2C) of the Bill, the ATO advises that the implementation provisions in the
bill are consistent with previous withholding tax amendments. When the interest
withholding tax provisions were strengthened in 1973 to cover interest payments
made through offshore permanent establishments of Australian residents, the
amendments announced by the then Treasurer applied to interest payments made
after the date of the announcement (2 July 1973). The absence of any
grandfathering of pre-existing contracts can be explained in terms of the
general policy behind the introduction of the interest withholding tax regime -
that interest payments by residents to non-residents should be subject to
withholding tax unless specific exemptions applied - its introduction being
sufficient notice of the legislative intent.
The emergence of a practice of making royalty payments
through permanent establishments created a need for a similar legislative
amendment, on similar terms to the interest withholding tax provision, to
ensure that such royalty payments are brought within the general policy of the
royalty withholding tax regime that was introduced in 1992. The ATO also
advises that following the introduction of the Royalty Withholding Tax regime
in 1992 it has seen the emergence of this technique to seek to avoid
withholding tax on royalty payments. Some companies have done this in the face
of clear evidence that these were viewed as minimisation techniques by the ATO
and, as is evident in at least one copy of advice obtained by the ATO, that
they could expect the ATO to act on obtaining evidence of it occurrence.
While views may differ as to what constitutes
retrospectivity, the proposed amendments will not allow for clawback of
interest or royalty withholding tax in respect of past payments and, in that
sense, the measures are prospective.
Schedule 5 - Interest withholding tax and related
provisions
Interest withholding tax exemption under section 128F
The Interest Withholding Tax exemption amendments of the
Bill were strongly supported in evidence to the Committee on the grounds that
they would remove a restriction which has prevented low cost overseas funds
being lent to Australian homebuyers and consumers. PUMA Management Limited
submitted that providing lenders with access to the cheapest overseas funds
free of withholding tax is an important measure in maintaining competitive
pressure to the benefit of Australia's homebuyers.[11]
Senate Scrutiny of Bills Committee's Consideration of the Bill
The Senate Scrutiny of Bills Committee considered the
Taxation Laws Amendment Bill (No.2) 1997 in its second report of 1997. The
Scrutiny of Bills Committee noted that item 19 of Schedule 2 to the Bill
provides that the Schedule's proposed amendments would have effect from Budget
night 1996, and therefore prior to Royal Assent. However, the Committee further
noted that given the amendments concern a budget measure, they may be treated
as "..something of a special case."[12]
In support of its position, the Scrutiny of Bills Committee refers to a paper
titled The Operation of the Senate Standing Committee for the Scrutiny of
Bills, 1981-85, in which the then Chairman of the Committee, Senator Tate,
stated:
It is customary...for budgetary measures to be made
retrospective to the date of their announcement on Budget night and for changes
to taxes, levies, fees to be given effect from the date of their introduction
into Parliament.[13]
The Scrutiny of Bills Committee also acknowledged the
retrospectivity provisions contained in Schedule 5 of the Bill. Item 15 of
Schedule 5 provides that the amendments proposed by Part 2 of the Schedule
would apply in respect of a debenture issued on or after 1 January 1996 and
therefore prior to Royal Assent. However, given a transitional provision (item
16) quarantines interest paid on such debentures before the commencement of Part
2, the Scrutiny of Bills Committee accepts this retrospectivity.
Item 18 in Part 3 of Schedule 5 proposes that the Schedule 5
amendments apply to interest paid on or after 1 January 1996. The effect of
the amendments is to deny Australian residents an income tax deduction in
respect of a payment of interest overseas if those persons have neither
deducted nor remitted interest withholding tax to the Australian Taxation
Office. In respect of this proposed retrospectivity the Scrutiny of Bills
Committee observes "..that the date of the 1 January 1996 is the same as
the date from which the amendments in Part 2 commence. The relevant interest in
Part 2, however, is quarantined until the commencement of these provisions.
Neither the explanatory memorandum nor the second reading speech give any
reason for requiring the relevant interest in Part 3 to be affected
retrospectively from 1 January 1996.
The Committee further notes that the amendments give effect
to an announcement by the Treasurer in June 1996. As the Bill has been
introduced more than 6 months after the announcement and as the committee is
unaware of any draft bill being published in the interim, the resolution of the
Senate of 8 November 1988 may apply. That resolution states that:
...where the
Government has announced, by press release, its intention to introduce a Bill
to amend taxation law, and that Bill has not been introduced into the
parliament or made available by way of publication of a draft Bill within 6
calendar months after the date of that announcement, the Senate shall, subject
to any further resolution, amend the Bill to provide that the commencement date
of the Bill shall be a date that is no earlier than the date of introduction of
the Bill into the Parliament or the date of publication of the draft
Bill."[14]
The Scrutiny of Bills Committee has sought the Treasurer's
advice as to why these interest payments have not been quarantined. Pending a
response from the Treasurer the Scrutiny of Bills Committee draws Senators'
attention to the provision, as it may be considered to trespass unduly on
personal rights and liberties, in breach of principle 1(a)(i) of the (Scrutiny
of Bills) Committee's terms of reference.[15]
Recommendation
The Committee recommends that the bill be passed.
Senator Alan Ferguson
Chairman
Minority Report - Senator Andrew Murray
Taxation Laws Amendment Bill (No. 2) 1997
Senator Andrew Murray
Minority Report
The Australian Democrats dissent from the Committee's
recommendation that the bill be passed in its present form, as we believe that
the provisions in the bill fail to fully deal with leakage from the tax system
through non-resident withholding tax arrangements.
The Democrats instigated this inquiry into the Taxation Laws
Amendment Bill No 2 because of a concern that the Government's proposal to deal
with withholding tax avoidance were inadequate to deal with the full scope of
the problem. The evidence to the Committee, and research conducted by others,
shows clearly that this is the case.
The extent of tax avoidance through withholding tax
arrangements has long been a matter of contention. The House of Representatives
Standing Committee on Finance and Public Administration reported on this matter
in March 1991 in its report "Follow the Yellow Brick Road." The
Committee, based on estimates by taxation academic Barbara Smith, suggested
that tax avoidance on interest withholding tax by non-residents could have been
as much as $943 million in 1988/9 alone[16],
although the Taxation Office estimates the revenue loss was probably less than
$380 million.[17]
Since then, the Taxation Office has moved to close at least some of the
withholding tax loopholes, with this Bill alone estimated to raise $100 million
a year from 1997/8 on. In that respect, the bill is a welcome advance on
current law.
Evidence presented to the Committee suggest that the loss to
Australian revenue through perfectly legal withholding tax structuring is
considerably higher than that. The Australian Owned Companies Association
(AOCA) in its submission, pointed out that it is perfectly legal for a foreign
investor to structure his/her arrangements to reduce their Australian tax rate
to a maximum of 10 per cent, while an Australian investor will always end up
paying at their maximum marginal rate, usually 48.7 per cent. [18]
Withholding tax on dividends paid to non-residents is
particularly anomalous. The tax law in Australia set an ordinary withholding
tax on dividends paid overseas of 30 per cent. However, taxation treaties with
most nations have reduced this rate to 15 per cent. When dividend imputation
was introduced by Treasurer Keating in July 1987, it was determined that fully
franked dividends paid to non-resident shareholders would be made exempt from
withholding tax. As AOCA pointed out in its submission, this has resulted in most
dividends escaping out of Australia without any tax being paid by the
shareholders. In 1995/6 dividends paid to foreign investors totalled
$12.843 million, but withholding tax on dividends netted only $153 million,
just 1.2 per cent of dividends.[19]
This treatment can be contrasted with resident shareholders.
With such shareholders, franked dividends at the top marginal rate are taxed at
an effective rate of 19.8 per cent after taking into account imputation
credits. If dividends paid to foreign investors were taxed at the same
effective rate, the Australian tax office would have been $2.39 billion better
off last financial year. That is the cost to the Australian taxpayer of the
current withholding tax arrangements on dividends. As many countries do not give
their taxpayers a tax credit for company tax paid, but only for withholding tax
paid, Australia is directly subsiding the treasuries of other countries. [20]
The withholding tax arrangements on interest create other
difficulties. Tax treaties typically reduce the tax paid to foreign investors
on interest earned in Australia to just 10 per cent. AOCA points out that this
very low rate allows foreign investors to avoid payment of company tax by
arranging a loan through a third party from the foreign parent to the
Australian subsidiary. The interest on this loan becomes a tax deduction, with
only nominal interest withholding tax at a maximum rate of 10 per cent payable.[21]
To combat this, the AOCA recommended that withholding tax payable on interest
paid on foreign borrowings by companies from related companies, non-bank
financial institutions or other unlicensed organisations should be at the rate
of 48.7 per cent. [22]
The House of Representatives Committee was also concerned
that Australian residents might contrive arrangements using non-resident third
parties to convert interest earned in Australia into interest paid overseas. It
recommended that the Commissioner be given a discretion to impose the top
marginal rate of tax on such arrangements[23]
, and that interest streamed through a trust to non-treaty country
beneficiaries should be subject to ordinary non-resident rates of tax rather
than the withholding tax rate.[24]
Yet, while Schedule 2 of this bill closes the scope for some
loopholes, instead of addressing the issues with the taxation of interest paid
to non-residents in a comprehensive way, the bill also adds to the
opportunities for avoiding withholding tax. Schedule 5 of the bill extends the
exemption from interest withholding tax to a wider range of loans in Australia.
The Australian Taxpayers' Association has questioned the fairness of this
measure, with its National Director Peter McDonald asking why should
non-residents be exempt from tax on their Australian income:
"Australians have to pay up
to 48.7 per cent on interest they earn on savings, plus provisional tax is
payable at up to 51.6 per cent if a resident earns $1,000 or more on interest
income. Under existing rules., there is a real disincentive to save which is
caused by high marginal rate and provisional tax payable on savings.
Consequently, Australia's savings rate has decreased and borrowing has
increased. These new rules will only add further incentives to borrow and less
incentive to save....We are most concerned about the inequity of the different
tax treatment between residents and non-residents."[25]
AOCA expressed similar concerns about the extent to which
foreign borrowing has been encouraged by the interest withholding tax system.
The Association pointed out that interest and dividends paid overseas
constituted 95 per cent of Australia's current account deficit, and have grown
from $20 billion in 1992 to $27.8 billion in 1996.
The Australian Democrats recognise that much of the scope
for tax minimisation in withholding tax arises not from Australian law, but
from tax treaties. Indeed, it could be argued that the general framework of tax
treaties with typically low 10-15 per cent withholding tax disadvantages
capital-importing countries like Australia at the expense of capital exporting
countries. It is no surprise then to find that general international tax
arrangements were largely designed by capital exporting countries as part of
the Bretton Words arrangements after World War II. Indeed, the growing
difficulties with international tax arrangements has lead one of Australia's
most prominent tax economists, Professor John Head of Monash University, to
call for a "GATT on taxes" to ensure tax is properly paid and
equitably shared.
The rising level of foreign debt and foreign investment in
Australia has seen the disadvantage suffered by Australia as a result of
withholding tax also rise. In the past fifteen years, Australia's net foreign
liabilities (ie. net foreign debt and net foreign equity investments) has risen
from about 20 per cent to a massive 58.5 per cent of GDP.[26]
That means that a very large proportion of our economy, almost 40 per cent of
GDP, is increasingly being taxed at the concessional withholding tax
arrangements rather than at full resident rates. With a growing proportion of
our national income flowing to non-residents, Australian authorities need to
give urgent attention to any holes in our tax net, while also lobbying to
minimise the extent of our internationally disadvantaged position.
While the five anti-avoidance measures announced in this
bill, combined with the measures announced in the Budget on taxation of foreign
sourced income and trading in franking credits, are welcome improvements, they
fall well short of what is necessary to ensure that foreign investors pay their
fair share on income earned in Australia. The contribution of undertaxation of
income paid to non-residents to the Budget deficit and to the fall in national
savings generally obviously needs urgent and detailed consideration.
Recommendations:
- While not
opposed to the anti-avoidance provisions in the bill dealing with non-resident
withholding taxes, the Committee believes that the provisions fall well short
of guaranteeing that non-residents pay an appropriate amount of tax on income
earned in Australia.
- The
Committee recommends that the Government give consideration to amending the
bill to remove the exemption for fully franked dividends from payment of
withholding tax, and consideration to raising the level of withholding tax on
dividends to 20 per cent.
- The
Committee recommends that the Government give further consideration to amending
the bill to tax interest on loans through a related company by a non-resident
at the top marginal tax rate, and consideration to the use of discretionary
trusts to minimise payment of withholding tax.
Senator Andrew
Murray
Appendix 1 - List of Submissions
1
|
Australian Owned Companies Association Ltd
|
NSW
|
2
|
PUMA Management Limited
|
NSW
|
3
|
Taxation Institute of Australia
|
NSW
|
|
|
|
4
|
Coopers & Lybrand
|
NSW
|
|
|
|
5
|
Corporate Tax Association
|
VIC
|
|
|
|
6
|
Arthur Andersen
|
NSW
|
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