Australia: Recent and Proposed Tax Reforms

Recent and Proposed Australian Tax Reforms
By Caroline Maxwell, London

Australia's leading business executives could be forgiven for being a little rattled in recent years. Australian companies, and Australian resident multinationals seem to have been condemned, in the words of the Chinese proverb, to be living in 'interesting times'.

A survey conducted by Ernst and Young in 2001 showed that the majority of the country's top businesses were dissatisfied with the reforms already implemented, and felt that the Australian Taxation Office (ATO) had acted in its own interests, and had failed to adequately consider the needs of Australian businesses.

During 2002 and 2003 the Australian taxation system, especially with regard to corporate issues, was still being reformed at a rate of knots, and many found it difficult to keep up. Although the aim of many of the reforms was to create a stable, long term, and coherent system of taxation, companies were forced to make decisions regarding tax planning and the structuring of their business on a relatively short term basis.

The 'Review of Business Taxation: A Tax System Redesigned' report, or ' The Ralph Report' as it is more commonly known, was received by the Australian government in 1999. The report proposed a number of changes aimed at redesigning the country's business taxation regime, and a great many (but far from all) of the proposals contained therein were accepted by the government, (albeit with some amendments) and were implemented in stages between 2001 and 2004.

Still, it was not enough for business, and in November 2004 the Australian Chamber of Commerce and Industry called upon the government to use its Senate majority to push through a second wave of major tax reforms to ensure that Australian business remained competitive. To argue its case, Australia’s largest business representative body released a Taxation Reform Blueprint entitled ‘A Strategy for the Australian Taxation System 2004-2014’ which set out a comprehensive programme of reform of both personal and business taxes over the next ten years.

While the Chamber explained that it welcomed the government’s tax reforms in 2000, which saw the introduction of GST and a reduction in company tax, it believes that the measures did not go far enough to improve Australia’s international competitiveness. ACCI chief executive Peter Hendy warned that subsequent tax reforms in other countries threatened to leave Australia behind. “In particular, Australia’s high marginal tax rates and low thresholds are uncompetitive by international standards,” observed Hendy. “This harms innovation, education and training, skilled immigration and entrepreneurship, while promoting tax avoidance and evasion,” he noted.

According to ACCI’s 2004 Pre-Election Survey, the level of taxation was the number one issue facing Australian businesses, followed closely by the complexity of tax legislation.

In January 2005 the administration of then Prime Minister John Howard said it was planning a major simplification of the country's tax code. Under the changes, the prior approach to combating tax avoidance through the introduction of new legislation to close loopholes would be scrapped in favour of the setting out of broad principles, and the issuing of rules and regulations by the Australian Tax Office. Dick Warburton, chairman of the government's tax advisory board, argued that the changes, which had been on the table for a number of years, should be put in place over the year that followed.

This wasn't enough to still the calls for reform, and in March 2005 tax counsel for the Institute of Chartered Accountants in Australia, Ali Noroozi called for the country's tax legislation to be substantially overhauled. Urging the government to publish a white paper looking at the existing system and consulting on the changes needed, Mr Naroozi drew attention to the gulf between the top marginal tax rate and the corporate tax rate as one of the key areas in need of reform.

"At the moment, because there is such a big difference between the top marginal tax rate and the company tax rate, there are always people who do explore all sorts of ways of warehousing funds in companies," he explained.

He was followed in April of that year by business lobby group, the Business Council of Australia which called upon the government to undertake an immediate and comprehensive review of the nation’s tax system, warning that high rates and a growing level of complexity and red tape were threatening to stifle national competitiveness and stymie economic growth.

“As with business, economies are in competition with each other. Governments cannot be wedded to tax structures without considering their effect on their economy’s competitiveness internationally,” observed Hugh Morgan, BCA‘s Tax Action Plan President. “Our analysis demonstrates that in a number of tax areas, we are not competitive and it is impacting upon issues that go to the continuing success of Australia’s economy,” he added.

Mr Morgan went on to argue that comprehensive debate was needed on radical root and branch reforms to the Australian tax system. Under the BCA’s major proposals, the Commonwealth-State tax and state business taxes would be overhauled, as would personal income tax, which would be levied at a single low rate of 30% for high income earners, thus bringing it into line with corporate income tax.

The group also urged a general review of the personal income tax system, which would culminate in the reduction of effective marginal tax rates and an improved tax environment for saving. These changes would be carried out in conjunction with a “comprehensive” simplification of the tax administration and compliance systems, paring back the 9,600 page Tax Act which has increased from 3,600 pages in 1996. By early 2006, this exercise had succeeded in reducing the bulk of the legislation by 30%.

The BCA called upon the government to implement the first changes by the 2006/2007 budget in order to stave off “immediate threats to...competitiveness.”

In February, 2006, then Treasurer Peter Costello launched a new study, the outcome of which was designed to gauge the competitiveness of Australia's tax systems relative to other developed economies.

The aim of the study was to identify areas where Australia both leads and lags its international trading competitors, and it was to cover taxes collected at national, state and local government levels. Personal, business, indirect, property, transaction and superannuation taxes will be included in its remit.

Taxation Reforms In 2000/2001

Possibly the most important, and certainly the most talked about measure of recent times was the introduction of GST, or the Goods and Services Tax in July 2000. GST is essentially a value added indirect tax, similar in nature to VAT and GST where it exists throughout the world, and imposed at a rate of 10%.

Any business with an Australian turnover of more than AU$75,000 (at the time of writing) must be registered for GST purposes, and a registered business must collect GST on the consideration it receives for making taxable supplies. There are, however, a few exemptions from to the GST rules:

1) Businesses making supplies or providing services in areas such as health, education, and basic food products are exempt from GST. Although they are not liable to pay the tax themselves, they can, however, claim input tax credits (essentially a GST refund), for acquisitions related to the making of those supplies.
2) Business concerned in 'input taxed' areas, such as financial services suppliers, and those involved with existing residential properties are also exempt from GST. However, they may not be able to claim an input tax credit for acquisitions pertaining to the making of those supplies, or the provision of those services.
3) Registered businesses are not required to pay GST on their exports. However, GST is imposed on all goods imported into Australia, although once again, a refund may sometimes be claimed.

The topic of GST caused quite a stir when put forward by John Howard and Peter Costello, and there was somewhat hysterical speculation that 40% of small businesses would fail as a result of added administration and costs.

Despite the compliance casualties, in the final analysis, it is the end user in the chain of transactions that really bears the brunt of the charges, as business can usually claim a GST refund on business related acquisitions. And with personal income tax rates on a downward trajectory, people are not as upset as perhaps they might have been. In conclusion, it is probably fair to say that although the tax has not been well received, it could have been worse.

However, although the tax itself was generally accepted with only a little grumbling, there was an outcry from small business groups, investors, accounting groups, and the opposition regarding the GST Business Activity Statements, and the government was forced into an embarrassing climb-down. The initial idea was that businesses would be required to report monthly or quarterly to the tax office their turnover and the amount of tax collected- on a double sided A4 page with 148 pages of instructions! Unsurprisingly, this was deemed to be too complex, and the burden of bureaucracy was too much for many SMEs and small investors.

Eventually, bowing to widespread criticism, the Australian government made substantial changes to the BAS rules, which meant that:

• Businesses with under AU$2 million turnover, self-funded retirees and nearly 500,000 small investors were freed from much of the costly and time consuming paperwork
  
• People with investment income do not now have to fill in an instalment activity report
  
• Over 1.5 million people (including sole traders) now just have to send the tax office a cheque each quarter for the same amount.
  
• The BAS form now only needs to be completed and adjustments made once a year

Although the changes were welcomed, the incident was something of an embarrassment to the government, which was criticised for costing Australian business billions of dollars in setting up quarterly reporting procedures that subsequently had to be abandoned.

In his 2004 budget, Australian Treasurer Peter Costello proposed further reforms to the GST regime aimed at reducing the compliance burden for small businesses, by allowing firms currently below the registration threshold and voluntarily registered for GST to report and pay GST annually, instead of quarterly. These measures were expected to benefit around 740,000 small businesses and 30,000 non-profit organisations that were voluntarily registered and paid on a monthly or quarterly basis at that time.

Capital Gains Tax

Changes to Australia's Capital Gains Tax regime were brought forward to improve the country's international competitiveness, soon after the Ralph Report was issued. New measures included:

• The abolition of averaging provisions for assets sold after 11.45am on the 21st September 1999
  
• The indexation of capital gains frozen from the 30th September 1999
  
• The exclusion from the CGT regime of gains and losses on the disposal of plant
  
• A 50% cut in CGT for individuals on assets purchased after October 1st 1999
  
• An effective CGT rate of 10% for complying superannuation funds and some trusts.

Franking of Corporate Dividends

Taking effect in 2001 were new rules governing the franking of corporate dividends, a new imputation regime, and new rules for franking credits for foreign withholding tax. These rules allowed that:

• A franking credit of up to 15% of a gross distribution received by an Australian corporate entity will be available for foreign withholding tax paid on foreign distributions.
  
• An additional franking credit may be allowed to a resident corporate tax entity if withholding tax on the distribution received by the entity is less than 15% of the gross distribution, and withholding tax was by its foreign subsidiaries on the foreign distributions they received.

In order to be eligible for the credit, foreign distributions must be equivalent to frankable distributions.

Transfer Pricing and Thin Capitalisation

The Ralph Report also threatened that related party transactions outside a consolidated entity would be subject to 'arm's length' rules, which basically meant that they would receive the same consideration and tax treatment as if they had been two independent parties dealing with each other at arm's length. A set of transfer-pricing regulations was put in place in 2001.

Of great importance to multinationals is the issue of thin capitalisation (whereby a non-resident entity chooses to finance an Australian subsidiary using debt rather than equity in order to maximise interest deductions against Australian income), and reforms were implemented in 2001. The new regime applied to both foreign entities investing in Australia and Australian businesses investing overseas, and was designed to prevent multinational taxpayers from allocating a disproportionate amount of debt to their Australian operations.

The existing thin capitalisation and debt creation regimes were repealed, and the previous safe harbour debt to equity ratio of 2:1 for general investors was amended to 3:1. For financial institutions, this ratio applies to non-lending business, with an overall safe harbour gearing of 20:1 applying to the total business of financial institutions.

Changes In 2001/2002

The reform most triumphantly heralded by the finance minister was the reduction of corporate income tax, from 34% to 30%. Mr Costello also announced the abolition of stamp duty on most share transactions and put an end to the Financial Institutions Duty (FID). The FID required financial institutions which receive money to pay a duty of 6 cents per $100 dollars received for normal transactions, up to a maximum of $1200 per transaction, or 0.005% of 5% of the Australian operation's average daily liability for short term dealings. This move was said to be costing the government (or saving the taxpayer, depending on how you look at it) $1.2 billion per year.

Other measures possibly of interest to Australian business and resident multinationals were the introduction of full GST input credits on motor vehicles and Capital Gains Tax concessions for shareholders of listed investment companies. There were also transitional changes to the draft legislation for the thin capitalisation and debt/equity ratios, but nothing too spectacular.

Capital Allowances

A new capital allowances regime came into effect in 2001, replacing the previous 37 separate capital allowance regimes with a uniform system. By doing this, the government hoped to achieve greater simplicity and neutrality, provide consistent treatment for capital expenditure, and provide the opportunity for write-offs of certain types of capital expenditure based on several alternate bases (although the range of 'black hole' expenses that are available is said to have disappointed Australian business). The new system was based on the following principles:

• A set of general rules to calculate the deduction for the notional decline in value of most depreciating assets. (However, the wording raised problems for Australian businesses in this respect, since the definition of 'assets' is left vague. This means that businesses in Australia are still in the position of having to use three different concepts of an asset in CGT, accounting and capital allowance terms).
  
• A pooling mechanism whereby some expenditures are pooled and given deductions for the decline in the pool.
  
• Deductions, immediate or over a period of time, for certain capital expenditure used in the primary production and mining industries.

Consolidation

From late 2002, wholly owned entity groups were allowed to choose whether to consolidate, and thus be treated as a single taxpayer for income tax purposes. Companies could choose not to consolidate, but after the previous grouping provisions were repealed, and the inter-corporate dividend rebates ceased to apply, they were likely to find that they were unable to transfer losses, defer tax on the transfer of assets, or obtain rebates on un-franked dividends if they decided not to, so perhaps the word 'choice' is slightly misleading…

Previously, each entity within a wholly owned group was taxed separately, some (but not all) intra-group transactions were ignored, inter-corporate dividend rebate and loss transfer provisions still applied, and although there was the potential for double taxation on gains, there was also the possibility of legitimate tax minimisation by creating multiple tax losses within the group, and value shifting so as to create losses where no actual economic loss had occurred.

Other Ralph Report Proposals

One of the more extreme proposals in the Ralph Report, originally its centrepiece, was the 'Option 2' or 'tax-value' method, which if adopted would have meant that taxable income would be determined on the basis of cash flows and the changing value of assets.

Although the federal government announced its support in principle for Option 2, the start date was delayed in order to allow further consultation and investigation, Finally, in March, 2002, the Board of Taxation, (itself a creature of the Ralph Report) presented a 260-page consultation document. ATO Assistant Commissioner Andrew England, who helped draft the proposal, said that although the plan aimed to simplify the two existing Income Tax Assessment Acts, and provide a more robust and comprehensive structure for income tax law more consistent with economic and accounting approaches to income measurement, it was still likely to face opposition from the business sector and tax practitioners.

'TVM is not a new tax, it's a new way to draft income tax law and structure income tax law,' Mr England told journalists, pointing to the proposal's revenue neutral properties.

He was right about the opposition: in September, then Treasurer Peter Costello announced the demise of the government's Tax Value Method (TVM) plans, much to the delight of the Australian business community. Michael Dirkis, tax director of the Tax Institute of Australia welcomed Mr Costello's announcement:

'We are happy to say that chapter in tax reform has gone away. It is good that the government has seen common sense with this issue,' he commented.

Institute of Chartered Accountants tax counsel, Brian Sheppard echoed this sentiment, explaining that: 'It wasn't going to deliver a simplified tax system, just a different tax system.'

Taxation of International Business

The Government was slow in grasping the nettle of the taxation of international businesses, not releasing its proposals until August, 2002. Launching the international taxation arrangements consultation paper, Mr Costello observed that:

'I do not want to see Australian companies leave Australia. I want Australian companies to grow and remain headquartered in Australia.' He continued: 'The net benefit will be if we can encourage regional headquarters and promote Australia as a financial centre.'

Among the suggestions contained within the consultation document were: the reduction of capital gains tax for foreign executives working in the Commonwealth, and the elimination of double taxation on foreign share options.

The Treasury Department was also said to be considering offering tax breaks to foreign multinationals in order to encourage them to establish regional headquarters in Australia.

The planned changes were warmly welcomed by business groups. Chief Executive of the Business Council of Australia (BCA), Katie Lahey commented:

'Australia must grasp this chance to recalibrate its cross-border tax laws to be internationally competitive, to attract and retain people, skills and investment, and at the same time jettison the dead weight holding back the international growth of Australian companies.'

Executive Director of the Corporate Tax Association, Frank Drenth echoed this sentiment, announcing that: 'This will make the system more workable.' He said that the newly released proposals represented a step in the right direction, explaining that:

'In themselves, these measures are not going to make a Singapore funds manager pack up their bags and move to Sydney. But they represent recognition that we don't need to tax every last cent of foreign-sourced income.'

Taxation Reforms In 2003/2004

The government took further steps towards improving the international taxation regime for businesses in December, 2003, introducing measures which took effect from July, 2004, relaxing Controlled Foreign Company (CFC) rules as they apply to countries possessing broadly similar taxation regimes (BELCs), such as the US, the UK, Germany, France, Canada, Japan and New Zealand, in effect exempting income derived from outside such countries but passing through them (and therefore taxed in them).

Further legislation was expected to extend the exemption to income arising inside the 'comparable' countries.

"Once the package is complete", said Ernst and Young at the time, "Australian multinationals doing business in these major commercial centres will no longer need to be overly concerned with measures that are aimed at tax haven operations. The Government has clearly recognised the fact that business takes place in these countries for commercial rather than tax related reasons."

However, CFC rules continued to apply to income derived through a trust or arising under the Foreign Investment Fund (FIF) measures, even if derived through CFCs resident in such comparable tax countries."

The new legislation also allowed fund managers to invest up to 10% of their fund in foreign passive investments before FIF rules apply, and also aimed to relieve complying superannuation funds from the FIF measures. The amendments also provide a withholding tax exemption on widely distributed debentures issued to non-residents if those debentures are issued by public unit trusts.

Taxation Reforms In 2005/2006

In December, 2005, the Government released draft legislation for the final stages of reforms of the taxation of financial arrangements (TOFA stages 3 and 4).containing proposals for the tax-timing treatment of financial arrangements.

According to the government, the draft legislation reflected, where possible, financial accounting concepts contained in the new accounting standards, offering significant compliance cost savings compared to the current tax treatment.

The draft legislation contained rules that covered tax-timing treatments for financial arrangements, including tax-timing hedging rules designed to minimise tax-timing mismatches.

As previously mentioned, in February, 2006, then Treasurer Peter Costello launched a new study, the outcome of which is designed to gauge the competitiveness of Australia's tax systems relative to other developed economies.

The Business Council of Australia called for the country’s tax system to be put under "permanent watch" in order to ensure that it remains internationally competitive.

In a paper on tax reform, the BCA expressed concern that, despite the government's decision to review Australia's international tax competitiveness, there continues to be an absence of a strategic reform agenda for tax.

It called for the review of Australia’s tax system not to be a one-off, and to avoid focusing exclusively on whether current tax rates are competitive at the time the study is conducted, but how these rates match up with current global trends.

BCA President, Mr Michael Chaney commented that: “Given the fast-moving nature of global tax reform, a competitive tax rate now may become uncompetitive within a short space of time."

He added: “That’s why tax reform must be a permanent item on the reform agenda.”

Mr Chaney urged the government not to "play catch-up" through periodic, short-term changes to rates and thresholds, but to anticipate global trends in tax reform through a considered, forward-looking plan of reform.

The BCA paper also argued that the review should not to simply focus on OECD comparisons, given the large volume of trade that Australia undertakes with non-OECD economies.

The paper also recommended that the tax system should be subject to comprehensive and open review at least every two years, similar to regular tax review processes now in place in countries like New Zealand.

Entitled 'Keeping a Permanent Watch on Australia’s Tax System,' the paper noted a number of inadequacies in the Australian tax system, particularly the large gap - compared to other economies – between personal and corporate tax rates, which it said encourages high-income taxpayers to aggressively minimise their tax liabilities.

The paper also bemoaned the high cost of tax administration and the rapidly growing complexity of the tax system, the corporate tax burden, and the high rate of personal income taxation which discourages overseas talent to seek employment in Australia.

“Australia needs a more vigorous debate on spending priorities and strategies for the future,” Mr Chaney added.

“Business and individual taxpayers will not passively accept projections of ever-expanding spending needs and therefore, ever-increasing tax burdens," he concluded.

Taxation Reforms In 2006/2007

In February 2006, Australian Treasurer at the time, Peter Costello claimed that proposed improvements to the taxation arrangements for temporary residents would give Australia one of the most competitive expatriate taxation regimes in the world.

The Taxation Laws Amendment (2006 Measure No. 1) Bill 2006, introduced into parliament on February 16, represented the third time that the then National/Liberal government had attempted to make improvements to the expat tax regime, after two previous attempts were blocked by Labor Party opposition.

However, Costello explained that the new bill, introduced as part of the 2005/6 budget, would go further than the previously blocked legislation which would have applied a tax exemption to a temporary resident for a period of 4 years, only if the temporary resident had not been an Australian resident within the previous 10 years.

"The Government will now remove these time limits as they provide unnecessary disincentives and distortions for individuals wishing to remain working in Australia," Costello said in a statement.

The measure was to apply to holders of a temporary visa, with the exception of those who are directly or indirectly treated as residents for social security purposes.

Under the legislation, holders of a temporary visa will not be taxed on foreign source income. They will continue to be taxed on all Australian source income and salary and wages generally, including income from employee shares or rights.

Further, capital gains taxation of temporary residents would be aligned with non-residents. The combination of these changes will also ensure that the capital gains tax rules for departing residents do not apply to temporary residents.

"The changes will significantly reduce administrative and compliance costs. It will also further reduce the cost to Australian businesses of employing expatriates," Costello observed, going on to note that the changes have been "welcomed" by business.

"The Government is committed to assisting businesses to access the skilled labour needed to compete internationally," the Treasurer added.

In April 2007, Australia's then Minister for Revenue and Assistant Treasurer, Peter Dutton introduced new tax legislation which aimed to improve the country's taxation system by reducing compliance costs, improving certainty for taxpayers, supporting philanthropy and ensuring the integrity of the tax base.

The Tax Laws Amendment (2007 Measures No. 2) Bill 2007 affected taxation in a number of areas, including mining and prospecting rights, research and development, donations of listed shares to deductible gift recipients, deductions for contributions to fund-raising events, and measures affecting venture capital activities.

Taxation Reforms In 2008

In 2008, the political guard changed, meaning that a number of the reform proposals put forward by the previous government were subjected to close scrutiny by its Labor successor.

In May 2008, Kevin Rudd's government formally announced that it was reviewing a raft of tax legislation proposed under the former coalition government of John Howard.

At the time the Parliament was dissolved on 15th October, 2007, prior to the federal elections, the previous government was still to enact almost 60 announced tax measures, and the Rudd government revealed that it had been working its way through this stock of announced but unenacted measures with a view to arriving at a decision on each of them and eliminating the considerable uncertainty that existed around them.

The Rudd government has already acted to introduce legislation to implement a number of them, it was announced at the time, including urgent measures such as that proposing tax-free treatment for superannuation lump sums paid to persons suffering from a terminal medical condition.

Measures which the government had decided should proceed, but where it proposed to make changes to the announcements by the previous government, were detailed in the Budget. The government also announced at that time those measures that it had decided should not proceed.

Measures which the government intended to proceed with included modifications to the income tax consolidation regime, and amendments to the thin capitalisation regime, to accommodate certain impacts arising from the 2005 adoption of Australian equivalents to International Financial Reporting Standards. It would also finalise the implementation of the simplified imputation system and proceed with new tax treaties with Japan and South Africa, the Rudd administration announced.

The government had not, however, decided whether to press ahead with a programme of Tax and Information Exchange Agreements (TIEAs) with offshore jurisdictions, it emerged. Nor had it at that time made a final decision on foreign dividend tax proposals, a review of tax secrecy, disclosure and anti-avoidance provisions, amendments to company residency rules, and modifications to transfer pricing provisions.

In August 2008, the Australia’s Future Tax System (AFTS) Discussion Paper was launched by Treasury Secretary Dr Ken Henry - claimed to be the most comprehensive review of the country's tax system in fifty years.

The wide ranging review will encompass many aspects of the federal and state/territorial tax system, and will consider: the balance of taxes on work, investment and consumption and the role for environmental taxes; enhancements to the tax and transfer system facing individuals, families and retirees; the taxation of savings, assets and investments, including the role and structure of company taxation; the taxation of consumption and property and other state taxes; simplification of the tax system, including the interactions between federal, state and local government taxes; and the proposed emission trading system.

The review will not, however, consider the rate and base of the GST, and interactions with the transfer system.

The government intends to launch a consultation with the public on the proposed changes, and the Review Panel will provide its final report to the Treasurer by the end of 2009.

"Long-term reform of our tax and welfare systems is a key way to secure our economic foundations for the future, create wealth, spread opportunity and reward working Australians," announced a statement issued by Treasurer Wayne Swan.

In December 2008, the Henry Review Panel released consultation papers to outline emerging issues from the public submissions process and provide the basis for further submissions, public meetings and direct consultation. Between December 2008 and May 2009, public submissions were invited on the retirement income system and the broader tax and transfer system. A report on the retirement income system was released by the panel in May 2009, which found that Australia's three-pillar retirement income system – consisting of the means tested Age Pension, compulsory saving through the superannuation guarantee and voluntary saving for retirement – is well placed to meet the challenges of an ageing society and should be retained. Further consultations, including discussions with key industry, professional and community groups, commenced in June 2009 on the broader tax and transfer system and were due to end in November ahead of the publication of the panel's final report in December 2009.

Taxation Reforms In 2009 and 2010

In February 2009, Henry said that the country might need to cut its company tax rate and amend its dividend imputation system to encourage economic growth and remain competitive. Henry had proposed funding a cut in company tax by reducing or removing dividend imputation - a move which would see investors in Australian companies lose their right to pay little or no tax on the dividends received during periods where full company tax rates are paid. Australia and New Zealand are amongst only a very few countries with an active dividend imputation scheme.

The AFTS, or Henry Review, was published by the government in May, 2010. Its main recommendation was a resource super profits tax (RSPT) on the mining sector, revenues from which would be used to subsidize corporate tax cuts for small businesses. The scope of RSPT has, however, since been modified and the levy renamed the Minerals Resource Rent Tax in response to an outcry from the mining industry.

In October, 2010, the Australian government released additional material underlying the 'Australia's Future Tax System' (AFTS) Review, to promote further discussion about tax reform.

The additional files released by the Treasury are academic working papers commissioned by the AFTS Panel and costing's of final AFTS recommendations, prepared by Treasury and the Australian Tax Office. They include:

• The Small Medium Enterprises Total Tax Contribution Report (PricewaterhouseCoopers);
• Non-renewable resource taxation in Australia (Australian Bureau of Agricultural and Resource Economics research report);
• Housing Taxation and Transfers research study (Professor Gavin Wood, Associate Professor Miranda Stewart and Dr Rachel Ong); and
• Simulating Policy Change Using a Dynamic Overlapping Generations Model of the Australian Economy (University of New South Wales).

The government has also published a number of other papers relating to the AFTS Review, including the Architecture of Australia's tax and transfer system, and a detailed consultation paper.

The published documents detail the analysis the AFTS Panel considered relevant to their recommendations, according to the Treasury.