Mr McClelland asked the Treasurer, upon notice, on 27 February, 1997:

(1) Further to his answer to question No 976 (Hansard, 12 December 1996, page 8656), has the Australian Taxation Office (ATO) had discussions with the Registered Club Industry in New South Wales on the subject of taxing Keno commissions paid to the clubs.

(2) If so, (a) what was the result of those discussions, (b) what determination has been made regarding the tax liability of the clubs and (c) what is the estimated revenue to the Commonwealth.

(3) Over what period has the tax on the Keno commission received by the clubs been made retrospective.

(4) Did he state that commissions paid to clubs by the TAB are assessable income not tax exempt mutual income.

(5) If so, what discussions have taken place between the ATO and the Registered Club Industry in New South Wales and what agreement or determination has been made on commissions paid to clubs by the TAB.

(6) Over what period has the tax on TAB commissions been made retrospective and what is the estimated revenue to the Commonwealth.

Mr Costello —The Assistant Treasurer has provided the following answer to the honourable member's question:

(1) The ATO has been discussing the tax status of commission income derived by registered clubs with representatives of the Registered Clubs Association of NSW for more than six months.

(2) (a) The ATO and the representatives from the registered clubs industry have concluded an `in principle'/proposed industry agreement in respect of Keno commission income, TAB income and other commission income which is derived by registered clubs. This proposed agreement has been put to the clubs and they are currently considering their position and deciding whether to enter into the proposed agreement.

(2) (b) The proposed industry agreement recognises that Keno commission, ClubTAB commission and other commission income are all fully assessable, and not subject to the principle of mutuality. This position is in accordance with existing legislation and case law.

(2) (c) No estimates of revenue collections for tax on Keno commission income have been made. However, as previously advised, the following gross commission income was derived by licensed clubs in NSW from Keno operations:

These figures represent gross commission amounts only and there may be tax deductible expenses related to the derivation of this income. In addition, a number of clubs deriving Keno commission income are exempt from income tax and revenue collections will, therefore, be reduced accordingly. Further, a proportion of the income may already have been returned by non-exempt clubs as part of their income derived from non-members.

(3) As the commission income derived by registered clubs has always been considered by the ATO to be fully assessable, the applicable income tax payable on that commission income is not retrospective. There has merely been a failure to declare the true amount of income and therefore the correct amount of tax has not paid.

(4) Yes.

(5) The issue of the tax status of commission income derived by the clubs from TAB operations has been discussed with the club industry representatives concurrently with the Keno income issue.

(6) As with Keno commission income, TAB commission income has always been considered by the ATO to be fully assessable, therefore the applicable income tax payable on that commission income is not retrospective. There has merely been a failure to declare the true amount of income and therefore the correct amount of tax has not been paid. No estimates of revenue collections for tax on TAB commission income have been made.