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IX. Conclusion
8.209. Many of the recommendations made in the chapter are intended to eliminate differences between tax accounting and financial accounting and in general to bring them into closer relationship. None of the recommendations involve concessions to business but merely give tax recognition to the fact that the expenses involved are incurred in earning business income.
8.210. Further differences between net income and financial profit will no doubt arise in the course of time as business operations change. A continuing concern with differences between tax accounting and financial accounting should be one of the main areas of responsibility of the independent standing committee on taxation proposed by the Committee in paragraph 22.63.
8.211. Attention is drawn to the Committee's recommendations in Chapter 18 in relation to the restriction of deductions for certain losses incurred in primary production activities. There it is proposed that a deduction be disallowed for a loss where the activity is not being carried on with a view to profit or where there is no reasonable expectation of a profit being achieved. Consideration should be given to the introduction of a provision along similar lines which would have application to business generally, or at least to a number of specific areas in addition to primary production. Motor racing, fishing and the search for minerals might be examples.
8.212. The Committee has not given special consideration to the peculiar problems of small businesses, whether they be problems of income tax, estate duty or other taxes. Shortly after its appointment it accepted a proposal from the Department of Economics at the University of Newcastle that it provide funds for a special survey of the effect of taxation on small businesses in Australia—a survey forming part of a broader investigation into small businesses. This survey was not completed in time for full consideration by the Committee; it is one of the studies listed at the end of this report which the authors have agreed may be published.