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4 J. Austl. Tax'n 1 (2002)

handle is hein.journals/jouaustx4 and id is 1 raw text is: THE REVIEW OF BUSINESS TAXATION'S OPTION 2 - PROBLEMS IN CONCEPT AND IN PRACTICE By John Glover OpTiop 2s eash flow/lax vaoBIus approch T comptin tax liabilities accordin to fccutingl princple iks t a d siraible change Pro esxsor, I use to WS ah, Unctirt of tradil g I articceps, focvsie an th relacemettf the caital andx iecoe distiction with Statoyrdes. Ince uisrcy is sndested betwcnfeene tha Rviciew of aC inhres Taxaio, s hueichn rk a/a comprehensiv incomec tax baxec, onl the one h Ind Ian itl' con7crretC1 a(cctanllce of thec Irealisatioln principle for ,,pil'lt gains, anl the otherl. Establislc hed tax vlces are dlisregarded under)/ 11c Optionl 2 lo the extent/ that1 thlose values requlire'the appoprat n7atghing of itemis of inicome and~ expenise. Excessivel allowa/ afledctionls are a striking,, consequenlce. Option 2) is then1 viewed, inl a wider context. System of tax and finanlcial accoluntling( arc shownl to serPve dIiterentI purp7oSes. Qn1c-year taxationl perliods and0 containmentII 0/i tax avoidan11ce cannot70 beccomdae withinl the objectives., of h d cosb 0/ lowi tax vl appr)och/. Gjiven 'that 17 th Australiall tax yS trem11 ass'unis thec rle of haws changeable and, indeflinite aICCtI(lil ntigpincileCs gre! off/tr unsu Iitedl to thec me1asurementII a)/ income/or11 taxpupoes 1. INTRODUCTION The Review of Business Taxation's (RBT) Option 2 approach to the calculation of taxable income makes a dramatic leap .Associate Professor, Faculty of Law, Monash University. An earlier draft of this article was delivered as a paper at the 13 th Annual Australasian Tax Teachers Association Conference, Sydney. 2001. The author is indebted to conference participants and Charles Birch for their suggestions. (2002) 4(1) 1

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