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Wednesday, 20 May 1936

Senator PAYNE (Tasmania) .- The Minister said that no new principle is involved in respect of the activities of insurance companies. The memorandum must be incorrect, as on page 125 the following section is quoted - 20a. - (1.) For the purpose of ascertaining the taxable income of a company the principal business of which is life insurance, there shall be excluded from the assessment the following amounts: -

(a)   all premiums received in respect of policies of life insurance and all considerations received in respect of annuities granted, and all income derived from any source, whether in or outside Australia, which, apart from the provisions of this sub-section, would not be included in the assessment, and all expenditure exclusively incurred in gaining those premiums or considerationsor that income;

That is the present law, but that is not what the bill provides.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - The honorable senator should study clauses 111 and 112.

Senator PAYNE - Clause 111 deals only with premiums, and clause 112 with the expenditure incurred in obtaining premiums, but that expenditure is not allowable as a deduction. A life assurance company cannot carry on without premiums, and, in obtaining premiums, has to incur certain expenditure. A retail distributor has to incur expenses in order to obtain business, as does an assurance company in securing premiums from policy holders.

Clause agreed to.

Clauses 113 to 123 agreed to.

Clause 124 verbally amended, and. as amended, agreed to.

Clause 125 - (1.) Where interest is paid or credited by a company to any person who is a non-resident -

(a)   on money securedby debentures of the company and used in Australia, or used in acquiring assets for use or disposal in Australia; or

(b)   on money lodged at interest in Aus tralia with the company, the company shall be liable, without affecting" its liability (if any) in respect of other income tax payable by it, to pay income tax upon that interest at the rate declared by the Parliament.

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