Islamic Finance in Australia : Methods for Tax Reform

This article focuses on reform issues currently under consideration by tax and regulatory authorities to facilitate Islamic finance in Australia. The necessity for a comprehensive approach is critical if the government's desire to promote Australia as a financial services hub is to be realised. However, in pursuing this goal one identified delimiter in attracting Islamic finance remains the current lack of tax parity treatment. It is argued that if such tax reforms are to be implemented, there should be an overarching approach to guide reforms – particularly to ensure that there are no adverse consequences, such as increased complexity and potential for tax avoidance. In addressing these shortcomings and potential barriers, this article proposes tax reform models aimed at providing guidance in designing appropriate tax measures for consideration by regulatory authorities. Drawing on approaches taken in foreign jurisdictions, we argue in favour of an ‘integrative' approach that incorporates an exception method