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Tuesday, 29 May 1984
Page: 2057

Senator GARETH EVANS (Attorney-General)(8.47) —I move:

That the Bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows-

Under section 4A of the Local Government (Personal Income Tax Sharing) Act 1976 , the Commissioner of Taxation is required, by the end of July each year, to make a determination as to the amount of personal income tax collections which is used as the basis for local government tax sharing arrangements.

Prior to the introduction of the prescribed payments system, which operates under Division 3A of Part VI of the Income Tax Assessment Act 1936 and the income tax regulations, collections of tax payable on income to which that system now applies, were reflected in the amount of provisional tax and balances of tax payable that were collected in a particular year of income and which are specifically included in the definition of personal income tax in the Local Government (Personal Income Tax Sharing) Act 1976.

The purpose of this Bill is to make amendments consequential upon the introduction of the PPS to allow payments made under that system to be taken into account in the personal income tax which forms the basis of local government tax sharing.

Without these amendments to specifically include the appropriate part of collections of PPS deductions, that is, collections from individuals in the year in which they are received, the amount of net personal income tax collections forming the basis of local government tax sharing arrangements would in future be permanently reduced by the amount of those PPS deductions.

The reason for this is that, in the year following their receipt, PPS deductions will reduce both the amount of tax otherwise to be collected on an assessment of the income of the preceding year, and the amount of provisional tax to be levied in respect of the then current year. Such a result would not only be contrary to the intended basis for local government tax sharing arrangements, but it would also be inconsistent with the tax sharing arrangements with the States which include PPS deductions in the base on which the tax sharing amount is calculated.

The amendments are essentially technical amendments designed to maintain the original intention of the Local Government (Personal Income Tax Sharing) Act 1976; to ensure consistency with the provisions of the tax sharing arrangements; and to allow the Commissioner of Taxation to include receipts received in 1983- 84 in the base figure for calculation of the 1984-85 grants to local government.

Financial Impact Statement

It is estimated that the amendments will allow an additional $2-3m to be paid to local governments under the income tax sharing arrangements for the 1984-85 financial year.

I commend the Bill to the Senate.

Debate (on motion by Senator Kilgariff) adjourned.