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The Taxation Framework
Like all financial products leasing and other equipment finance operate within the framework provided by the Commonwealth, State and Territory Governments’ taxation statutes.
Over the past 40 years there has been a series of reports on and inquiries into various aspects of the Australian Taxation System. Some have set down principles which should underpin a better system (e.g. simplicity, efficiency, equity); some have dealt with changes necessary to address external factors (e.g. inflation), while others have attempted to set an agenda for overall change; similar reviews have taken place at the State level. In addition, other wider-ranging inquiries (e.g. the Campbell Financial System Report and the Wallis Financial System Inquiry) have made observations and recommendations concerning tax. In 2008 the incoming Rudd Government announced a comprehensive review of Australia’s tax system; the Board of Taxation was also requested to conduct a review of the legal framework for the administration of the Goods and Services Tax.
Contemporaneously the various statutes have been continuously amended or added to, as governments have responded to social, fiscal and commercial developments.
Many changes have been made, and while AELA does not necessarily agree with all of them, it is fair to say that the general direction has consistently been towards improvement. The framework itself however has become overburdened by continuous amendment, resulting in excessive complexity, increased scope for ‘unintended consequences’ and major distortions caused by the narrowness, overlap and economic shift in the various tax bases. Given the complexity of modern commercial transactions, this outcome while regrettable, is nonetheless understandable.
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