Chapter 1Introduction
1.1On 11 September 2024, the Senate referred an inquiry into Australia’s taxation system (the inquiry) to the Senate Economics References Committee (the committee) for report by 10 December2024.
1.2As set out in the terms of reference, the inquiry considered Australia’s taxation system, with particular reference to:
(a)the social and economic impact of taxing people who earn less than the cost of living;
(b)assumptions used by Treasury in modelling income tax cuts;
(c)the tax arbitrage between onshore and offshore profits that encourage domestic profits to be transferred offshore rather than retained in Australia;
(d)the tax arbitrage between onshore and offshore profits that puts companies domiciled in Australia at a competitive disadvantage to companies domiciled offshore;
(e)the abolition of numerous tax loopholes that favour special interest groups, in particular foreign interests;
(f)the actual net company tax rate after franking credits have been refunded;
(g)the cost of recycling franking credits to and from Canberra;
(h)whether capital gains tax concessions for passive investment cause a misallocation of capital into the non-productive economy which has to be offset by higher taxes on active income which drives down productivity and the velocity of money; and
(i)related matters.
Conduct of the inquiry
1.3The committee advertised the inquiry on its website and invited written submissions by 18 October 2024. The committee also wrote directly to relevant stakeholders to invite them to make a submission.
1.4The committee received 24 submissions, as listed at Appendix 1.
Scope and structure of the report
1.5The evidence received by the committee covered a range of issues relating to the terms of reference.
1.6The report contains two chapters:
Chapter 1 outlines the scope and conduct of the inquiry.
Chapter 2 considers the views of submitters on various aspects of Australia’s taxation system, including proposals for reform. The chapter finishes with the committee view.
Acknowledgments
1.7The committee thanks the individuals and organisations who made written submissions to the inquiry.