Tax on Basis of Financial Accounting Principles
8.45. While the decision in the Arthur Murray Casenote has led to a more factual approach to the determination of income of a year, there remain elements of rigidity in the present law. This rigidity has already been referred to, as has also the claim that on occasions accruals tax accounting fails to arrive at a balance reflecting the true result from a business activity.
8.46. While the Committee rejects the proposal that net income be computed using generally accepted accounting principles, it acknowledges that it might well be in the interests of both the Revenue and taxpayers if the Act were more flexible in its requirements both as to computation of gross income and as to deductions for related expenses. In practice, flexibility has been given by administrative decision of the Commissioner and his officers.
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8.47. The Committee feels it would be desirable for the Commissioner to have statutory authority to compute the net income from a business activity using one or more of the generally accepted accounting principles approved by recognised Australian professional accounting bodies, where the taxpayer so requests and the Commissioner is of opinion that to do so would be reasonable having regard to all the circumstances.