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Wednesday, 20 May 1936


That the words " and the net exempt income of that year", sub-cla use (1) be left out.

For various good and sufficient reasons Parliament has seen fit to exempt certain classes of income from the payment of tax. Those exemptions include certain classes of Government securities, incomes from some forms of primary production and mining, and extraAustralian incomes in the hands of a resident when such income is subject to tax in the country of origin. It, therefore, seems inherently wrong that other provisions of the same legislation should, by indirect means, nullify the benefits of those exemptions i n many cases. That, however, is the effect of this clause, which sets out to allow losses incurred by a taxpayer against subsequent profits. Equity demands that that should be done; but the clause provides that, in arriving at the loss, exempt income shall first be taken into account. It provides further that when the loss is carried into the subsequent year's assessment, it shall be set off, in the first instance, against any exempt income of the year of assessment. In order to show how thebenefits of the alleged exemption may be lost, I cite the following example -



In case A it will be seen that the whole of the exempt income for the two years has been brought into account and virtually taxed by reason of the reduction of the loss against the later year's profits.

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