Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon. P. J. Keating, M.P.)
The likely direct revenue gain resulting from the introduction of the accruals system of taxing foreign source income is difficult to determine. This is particularly so in the initial years because:
- of the variation in CFCs' accounting periods and taxpayers' years of income;
- it is not known to what extent non-resident discretionary trusts will take advantage of the 10 per cent final tax liability by winding up before 30 June 1991;
- of the tax exemption for non-portfolio dividends received by resident companies from a company that is a resident of a country with a tax system comparable to Australia's; and
- it is not known to what extent the domestic tax base will increase as a result of these measures.
While the revenue gains in 1990-91 are not expected to be significant, it is anticipated that the revenue will increase to within the range of $60 million to $70 million in 1993-94 after the full impact of these measures takes effect.