• Service: Tax, Topics, Tax Reform, Financial Services Regulation
  • Type: Regulatory update
  • Date: 21/11/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Grant Wardell-Johnson

Grant Wardell-Johnson
Leader, Australian Tax Centre

+61 2 9335 7128

What could the Murray Inquiry mean for Tax Reform? 

by Grant Wardell-Johnson, Australian Tax Centre

In the tradition of Treasurer Howard’s appointment of Sir Keith Campbell, Chairman of Hooker Corporation, in 1979 and Treasurer Costello’s appointment of Stan Wallis AO, Managing Director of Amcor, in 1996, yesterday Treasurer Hockey appointed David Murray AO, former Chairman of the Future Fund and former CEO of the Commonwealth Bank, to oversee a review of Australia’s financial system.

Mr Murray will be assisted by four Australians from the finance, business and academic sectors and five international business people who will specifically advise on overseas competitiveness and offshore regulatory frameworks. These people have yet to be named.


The draft terms of reference for the inquiry have been released. Paragraph 6 states "the Inquiry will examine the taxation of financial arrangements, products, or institutions to the extent these impinge on the efficient and effective allocation of capital by the financial system, and provide observations that could inform the Tax Policy White Paper."


What could be up for discussion? Potentially a great deal, given that taxation has a significant impact on savings and investment, which is what the financial system is all about. There is the potential for the Inquiry to consider the effectiveness of the imputation system, leverage for Australian-owned and overseas-owned companies, competitiveness issues in obtaining finance from super funds, banks and debt markets and, following from the recommendations of the Johnson Report, withholding taxes, Islamic finance and the whole question of Australia as a financial centre in the future.


To draw on that great pioneer of chaos theory, Edward Lorenz, maybe there is a potential butterfly effect here. A mere flap of the wings in 'Murray Inquiry-land' could result in a future hurricane in 'Tax Reform land.'


The final report of the Murray Inquiry is due on 1 November 2014. It will follow an extensive period of consultation and an interim report


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