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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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