Abstract
As a result of the Commonwealth Government’s massive tax reform agenda flowing from the 1999 Ralph Report the non-commercial loss provisions [NCL] applied from the income tax year ended 30 June 2001 to tighten the extent to which individuals can offset losses from non-commercial activities against other income. Subsequently, in 2003 the Board of Taxation commenced a post-implementation review of the quality and effectiveness of the non-commercial losses legislation, and in 2004 submitted a confidential report to Treasury. This paper examines the bedding down process for the NCL legislation and seeks to critically review the legislation and find whether the reform will improve the tax system, or simply hinder entrepreneurship, existing and new small businesses. The paper finds that the NCL provisions greatly enhance tax equity and improve economic efficiency, albeit at the cost of increased complexity.
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