A preliminary study of the initial implications of the Ralph Report recommendations for the real proerty sector.

Abstract

The real property industry is one that intersects the boundaries of many aspects of taxation. The changes recommended by the Ralph Report (the Review of Business Taxation, A Tax System Redesigned, 1999 chaired by John Ralph AO), have had flow-on consequences to the real property sector. The Ralph Report itself contained about 280 recommendations which were aimed at improving the competitiveness and efficiency of Australian Business, reduce compliance costs and enhance the stability of taxation arrangements. This paper will focus on those issues that relate primarily to the real property industry sector. Therefore, this research paper examines a number of interrelated areas concerning the recommendations of the "Review of Business Taxation, A Tax System Re-designed" on the real property industry sector. The interrelated areas which have been selected includes the Capital Gains Tax regime, the Simplified Tax System, and Accelerated Depreciation. The Ralph Report initially gave the appearance that everyone would benefit, however, this was not so. The findings in this paper show the Capital Gains Tax regime to have created a more complex tax system, with a different tax treatment of capital gains according to the structure of the ownership of the asset. The Simplified Tax System result for small business was to face higher costs to establish eligibility for the various concessions introduced, and the removal of Accelerated Depreciation as a direct trade-off for the company tax rate reduction did little to enhance new property development.