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Thursday, 26 May 1983
Page: 1084

Mr LUSHER(10.4) —I want to touch on a couple of the points that the Minister for Finance (Mr Dawkins) raised in this debate by way of response. He dealt with two basic points. The first was the question of whether there was a capital tax element in what the Taxation (Unpaid Company Tax) Assessment Amendment Bill 1983 seeks to introduce. The second one that interested me was whether there was in fact any new tax element in what the Bill seeks to do. In relation to the capital tax aspect, what concerns me greatly is that the Minister obviously believes that he is dealing with fraud. He obviously believes that he is redressing some horrible ill that has existed in situations that have developed over the period. He totally misses the point when he talks about the fact that people should have liquidated companies, that they did not liquidate companies, indicating that they had some ill intent and that they were trying to avoid taxation or whatever by selling, as opposed to liquidating the companies and shares. We are dealing in this circumstance with a period when people were changing the structures of their business, changing the way in which they held assets and carried on their affairs quite legitimately under the laws that existed at the time. It is my understanding that the question of the sale of an asset and the treatment of that asset as being capital was validated by the High Court of Australia. People who were indulging in that practice were acting quite properly. They were perfectly entitled to take that course of action so as to order their affairs. In all ways they were acting legally and in all ways they were acting in a manner that was not improper to the slightest degree.

It concerns me that the Minister imputes motives to people who were legitimately restructuring their affairs and who were legitimately using the laws of the land to order their affairs to the best advantage. As the Minister would have to acknowledge, it is not incumbent upon the taxpayer, or the holder of assets, to order his affairs or to take what action he chooses in relation to those matters, in such a way as to maximise his taxation liability. He is perfectly entitled to order his affairs in such a way as to minimise any tax liability he may have. But what this legislation does is redefine something that was not income and redefine it retrospectively. Having redefined something that was capital and called it income, it then imposes a tax retrospectively on it. The Minister equally walks around the question of whether there is any new tax concept in what he is introducing. The Part IVA legislation was not in any way retrospective. The Minister has acknowledged that it was prospective.

The other important thing to be recognised about Part IVA is that it does not apply to anything because nothing happened after it was introduced and passed by the House. The fact is that when in Opposition it was certainly apparent to everybody that the then Opposition, the now Government, had views about retrospectivity. The Opposition members made it clear that they would legislate retrospectively. But it is one thing to legislate retrospectively where fraud is involved; it is totally another thing to legislate retrospectively when there is no fraud and where there is totally innocent behaviour on the part of shareholders, directors and citizens of this country. To come in and introduce legislation that tries to impute motive, which tries to suggest that people who were quite legitimately, under the laws of this land and under proper decisions of the High Court, re-ordering or restructuring their affairs, is quite reprehensible. The law is the law and people are entitled to be able to operate under the law as it exists. The way in which the Minister has responded to the points that have been raised from the Opposition side of the House is not satisfactory. He has missed the point. The reality is that he is introducing a retrospective tax on capital and it is a new concept in taxation in this country . The legislation deserves to be condemned. The other thing is that I want to support the views that have been put by other people. I said in the second reading debate that this legislation deserves to be left on the table. It deserves to have much better scrutiny than anyone has been able to give it in the course of the week since it was introduced and first exposed. It was put through this House with unseemly haste yesterday, after seven days, and we are now expected to pass it through the Committee stage this evening.

Amendments agreed to.

Bill, as amended, agreed to.

Bill reported with amendments; report-by leave-adopted.