The Government will address an abuse of deficiencies in the current business tax system in the period between the release of the second discussion paper of the Review of Business Taxation, A Platform for Consultation, and when legislation on a new business tax system is enacted.

The Chairman of the Review, Mr John Ralph AO, canvassed this issue in a letter to me today which accompanied the release of the Reviews second discussion paper.

I endorse the approach taken by the Review in having a full and frank discussion of deficiencies in the current law, along with identifying possible measures to address them. The concern Mr Ralph has raised with me is that having highlighted these weaknesses, they may be abused.

Mr Ralph identifies two possible options the Government could take to prevent such abuse, although the precise formulation of the arrangements will be covered in the Reviews final report.

The Government gives notice that it proposes to take such action as is necessary with effect from 22 February. The precise action taken will be announced having regard to the Reviews final recommendations.

Canberra Contact: Wayne Mayo (Treasury)

(02) 6263 4480

22 February 1999