An analysis of trusts and partnerships as members of Australian tax consolidated groups – good or flawed tax policy?

Abstract

This thesis analysed trusts and partnerships as members of Australian tax consolidated groups. The inclusion of trusts and partnerships in Australian tax consolidated groups is a unique feature of the Australian tax consolidation regime.

The first research question asked whether the Australian tax legislation adequately and effectively provided for the inclusion of trusts and partnerships in tax consolidated groups?

Using the legal research methodology of ‘doctrinal analysis’ the eligibility requirements for trusts and partnerships as members of consolidated groups and MEC groups were analysed.

Next, the consequences of trust and partnerships joining and exiting tax consolidated groups were analysed with various issues arising from that analysis noted and discussed.

The second research question asked what legislative reforms are required to better achieve the policy intent of the inclusion of trusts and partnerships in the Australian tax consolidation regime? Some legislative amendments were recommended.

The third research question asked whether the inclusion of trusts and partnerships in Australian tax consolidation regime promotes a stronger enterprise doctrine and represent good tax policy?

The conclusion was reached that the inclusion of trusts in tax consolidated groups did theoretically and in practice promote a stronger enterprise doctrine, however, although theoretically the inclusion of partnerships did promote a stronger enterprise doctrine, in practice, due to the very low incidence of partnerships in Australian tax consolidated groups, the inclusion of partnership has not promoted a stronger enterprise doctrine.

The second part of the third research question was answered by examining well-accepted factors of simplicity, neutrality and efficiency, fairness and competitiveness and it was concluded that Australia's decision to include trusts and partnerships in tax consolidated groups represented good tax policy.