The Commissioner has a series of discretions. For example the Commissioner can decide not to apply the non-commercial losses provisions (section 35-55) or not to apply excess contributions tax (section 292-465).
But while he can exercise these discretions he almost never does (and I pretty much only said “almost never” in this sentence as I have not seen every circumstance).
But now the Government has introduced a new Bill that will give the Commissioner a general discretion (see Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016) that applies to any part of the tax laws.
This Bill provides the Commissioner with a general discretion, described as his “Remedial Power”, to modify the operation of a taxation law where:
- The modification is not inconsistent with the intended purpose or object of the provision;
- The Commissioner considers the modification to be reasonable, having regard to both the intended purpose or object of the relevant provision and whether the costs of complying with the provision are disproportionate to achieving the intended purpose or object; and
- The Department of the Treasury or the Department of Finance advises the Commissioner that any impact on the Commonwealth budget would be negligible.
This means if the law does not achieve its stated purpose, and the costs will be minimal, he can ignore the words of the law and just implement the purpose of the law.
Most importantly, if the Commissioner does use this power to modify the operation of the law, a taxpayer can ignore the modification if it would produce a less favourable result for the taxpayer. This means, any change the Commissioner makes will only apply in the taxpayer’s favour.
So this sounds great… But we all know how often the Commissioner exercises his discretions in the taxpayer’s favour… almost never… and I expect the same will apply with this discretion. Lets remember to count how many times he uses this “Remedial Power” before it gets reviewed in three years time as is required in the Bill…
PS: This Bill also makes two other changes.
First, the Bill allows primary producers to access income tax averaging 10 income years after choosing to opt out, instead of that choice being permanent.
Second, the Bill provides relief from luxury car tax to certain public institutions that import or acquire luxury cars for the sole purpose of public display. These changes apply to public museums, galleries, and libraries that are registered for goods and services tax and that have been endorsed as deductible gift recipients.