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Friday, 5 October 1984
Page: 1310


Senator Dame MARGARET GUILFOYLE(11.18) —The Taxation Laws Amendment Bill, the Income Tax Assessment Amendment (No. 4) Bill and the Income Tax ( International Agreements) Amendment Bill, which are before the Senate, are complex and important Bills in the Government's taxation measures arising from the Budget and other decisions that have been taken. They cover a wide area of taxation law and in themselves bring many changes to the taxation law. There are differing reasons for the Bills. For instance, the Taxation Laws Amendment Bill is one that has been introduced to make substantial amendments to many of the offence and prosecution provisions. The amendments have arisen partly from a review which was initiated during the term of the former Government when the then Treasurer, Mr Howard, recognised that in many instances throughout the taxation Acts, rates had not been increased for many years. There has been no updating, upgrading or review of provisions relating to penalty and prosecution. So in that context we welcome the Taxation Laws Amendment Bill and the many changes that it seeks to make.

I will refer to some matters which are of concern to us a little later. I now refer to the Income Tax Assessment Amendment (No. 4) Bill which again has many provisions within it and seeks to change many matters, most of them arising out of Budget announcements that have been made by the Government. One of the matters that I wish to refer to relates to transfer of losses within a company group. In this context, it is interesting to note that the Government has reversed its decision of March 1983 and will now proceed with the proposal on this matter that had been introduced by the former Government. It is a proposal that would enable a loss suffered by one resident company to be an allowable deduction to another resident company in the same company group. That seemed to us to be a suitable and responsible proposal for change, and we welcome its introduction in the legislation that is before us. In introducing this proposal no mention was made of the fact that it was a reversal of the Government's previous decision but it is nevertheless an important initiative and we welcome it, whatever description it is given.

The business sector should be reminded, and I am sure it already knows, that the new proposal applies only to losses incurred in the 1984-85 year or later, effectively denying the business sector deductions on the 1982-83 and 1983-84 losses which could have been covered if the previous Government's decision had been upheld on the change of government. The delay related to difficulties perceived by the business sector is caused by the requirement that there be 100 per cent common ownership between companies. This has seriously disadvantaged those groups which have been unable by very small percentages to complete mergers and takeovers. The present legislation before us makes no concession in this direction. When we reach the Committee stage in dealing with this legislation the Opposition will move an amendment that relates to this matter.

Other provisions within the Income Tax Assessment Amendment (No. 4) Bill relate to such things as capital expenditure on non-residential income-producing buildings. The provision within the legislation increases the annual deduction allowable to 4 per cent of the cost of construction. This provision will cost something like $4m in the 1985-86 year. Although this is a modest extension of the capital expenditure depreciation provision it is something that will be of assistance to the construction industry and to those who gain their income from tourism. I think it is probably an overstatement to say that it is a significant boost. It is helpful and I am sure it will be welcomed but it is still a fairly modest increase that has been given.

We welcome also the extension of the investment allowance cut-off date for installation of new equipment from July 1986 to July 1987. This will cost up to $100m and it will be helpful. I think the Government again needed to look at its attitude with regard to investment allowance and the assistance and the incentive that it gave. I am glad that the extension of time provided for in this legislation has been given. In this legislation in the area of mineral exploration and prospecting, deductibility of expenditure is extended beyond a taxpayer's mining and associated income to income from any source. That proposal is something that has been suggested to me through the years as being desirable, and I am glad to see its introduction. This provision will cost about $8m in the 1985-86 year. It is again of modest benefit to the mining industry, but it is of benefit and is something that people felt would be an incentive to investment in mineral exploration. If a provision of this kind can give such an incentive just how much additional expenditure will be given in this area and what beneficial effect it will have remain to be seen. I recognise that the very substantial representations that have been made over the years have always been along the lines that that was all that was needed to increase rapidly the investment that people were prepared to make. So it will be interesting to see just what does occur as a result of this provision.

The increases in zone rebates are matters that were referred to in the Budget. They will cost something like $11m in a full year. They increase the basic component in zones A and B. This move is a recognition of the disadvantage experienced by people living in those zones in comparison with people in the rest of Australia. This is the Bill that also provides for the extension of the dependent spouse rebate to de facto spouses. On this matter, I wish on behalf of the Opposition to make a statement similar to that which was made by my colleague John Howard in the House of Representatives when the legislation was before that House. I want to make a quite clear statement that the Opposition is unhappy about this extension of the spouse rebate in the way in which it is provided for in the legislation. It is not our intention to try to defeat the relevant clause or to move an amendment to it but I use this opportunity to state that extension of the spouse rebate is not and was not our policy throughout all the years of government and it is a change that we resisted when we were in government. I recognise that representations have been made. They were made to me. The contrast between social security legislation and income tax legislation has often quite erroneously been used as a reason for making a change in the income tax law, but after all the considerations that were given to this matter when in government, we did not feel that it was a change that we were prepared to make in income tax law.

The former Treasurer reminded the House on Tuesday that he had had many representations but he resisted them, and he expressed the view of the former Government that governments should continue to discriminate in favour of orthodox marital arrangements and that in doing so governments were not passing moral judgments or moral sanctions on people's arrangements. In making the comments that I make on behalf of the Opposition, I am not making such judgments in this instance. It is not our intention to use this opportunity to have any debate on matters of social change but simply to state that as far as income tax law is concerned it would not be our policy to extend the spouse rebate to those who are in de facto arrangements. I will follow again what was said on Tuesday by the Deputy Leader of the Opposition in debate on these Bills. He said:

There are occasions when governments ought to pay some regard to symbolism, and I think it is very unfortunate that the Government of this country has decided to remove yet another bias in our system towards orthodox marriage arrangements.

It has to be said, as the Deputy Leader said, that we are not making moral judgments about people's personal arrangements; rather we are looking at those instances where governments are required to make laws. They are required to extend benefits. By their preferences they are giving recognition either to a situation that might have arisen in the case of, say, social security legislation, where we are looking at income support or, in the case of tax law, a benefit being widened to include another group in the community. I make those comments on behalf of the Opposition as an expression of our view that it is not our policy that this should have been done, but it is not something on which we will be moving any amendment at this stage.

The other matters in the tax Bills before us relate to such a diversity of things that many of them can be referred to as we work through them in the Committee stage. The Income Tax (International Agreements) Amendment Bill is one on which there has been very little comment. I make very little comment on it because the changes it makes are in accordance with agreements with other countries, in this case Belgium and Malta. The Opposition has no opposition to those measures.

The Income Tax Assessment Amendment (No. 4) Bill covers such things as the dependent spouse rebate and the rebate for pensioners and social security beneficiaries and makes Budget provisions for them. The changes that have been made to income tax law, in at least the rebate for pensioners instance, endeavour to offset the disadvantage that has resulted from the failure to index the tax threshold. The measure before us lifts the taxable income level below which the $250 pensioner rebate is available to a figure of $5,533 and to $5,595 for subsequent years, This is an endeavour to overcome the disadvantage that would be suffered by pensioners as incomes rise and they are affected by tax thresholds. My colleague, Senator Messner, made some comments on this not so very long ago and showed that it really does not have the same effect as another way of dealing with these matters could have had. However, it is the Budget proposal.

I want to make a brief comment with regard to the provisional tax that is to be calculated and the basis on which it is to be calculated under this legislation. The legislation provides for the 1984-85 provisional tax to be calculated on the basis of a 10 per cent rise on 1983-84 taxable income and varies the tax rates as outlined in the Budget along with the Medicare levy. It is of some interest to us that as the major component for this year's provisional tax rise is farm incomes which are forecast to fall this year, it would seem that the Budget's 10 per cent assumption about provisional tax payers' incomes could be a rather heroic sort of assumption. I think it is not disputed that farm incomes will be likely to fall substantially in this year. It is of interest to us that this figure of 10 per cent for the calculation is the one on which the Budget relies. Nobody would expect that figure to be achieved in terms of the provisional income tax for those people concerned.

Other things could be said again and again in a general tax debate, because it is a public debate in this country at present. Some people are awaiting tax policies from the Opposition which will be released in the very near future. Others are waiting for the outcome of the review of its tax policy that the Government has stated is occurring. As we have said in other debates, we cannot look at income tax without looking at Medicare as being an identified levy but in no sense different from the levy of income tax. When we consider the additional expenditure requirement of Medicare of something like $2 billion and we know that the levy is to raise something like $1.2 billion, we need to consider the fact that there is an increase in personal tax, whether identified or not, to cover that additional expenditure.

When considering the figures for the tax itself and the Medicare levy, it is of some interest to me at least to consider this month's financial statement of transactions released by the Minister for Finance (Mr Dawkins). The Minister's statement released just a few days ago demonstrates the effect of the Government 's policies on tax because it shows such figures as a 20 per cent rise in gross pay as you earn tax over the first two months of 1984-85. It also shows a 31 per cent decrease in PAYE refunds and a 33 per cent growth in net tax PAYE receipts. The figures that relate to refunds are of interest because they reflect the removal of health care and housing rebates and other tax changes which means that hundreds of thousands of people who would have received tax refunds have not received them. In fact, I am sure that both Government and Opposition members and senators would have received representations from constituents who in this year not only did not receive the tax refund that they expected but who also received assessments for additional tax to be paid. That is of significance when governments or oppositions talk about tax policy. People who had expectations of certain levels of tax now find that their expectations have not been realised; in fact, they have the difficulty of meeting some of their commitments under tax assessments.

I am sure that public interest in the Government's tax policy is one that is growing and one which will grow as people see the reflection of these figures in the changes in refunds and the growth in net PAYE receipts in the most recent statement that has been released by the Minister for Finance. Government tax policy is of interest because from public statements made by the Prime Minister (Mr Hawke) and other Ministers we know that the Economic Planning Advisory Council is the body that is working closely with the Government on tax policy. If we accept that the Budget itself was a result of the strong influence of the Australian Council of Trade Unions and we now hear that the tax policy to be put to the Government is the responsibility of EPAC, we await with some interest, in view of some of the statements of members of EPAC, a tax policy statement. I believe we can assume that the tax policy that will emerge from EPAC will introduce new taxes. It will introduce such things as a capital gains tax. I hope that the tax policy will be available for public reception before we go into the forthcoming election because the tax changes to rebates and other areas made by the present Government-such as the fact that there has not been recognition of growth in wages and the five new tax structures provided in the Budget-make many people wonder what exactly will be their personal tax commitment by the end of this financial year.

I hope that any tax policy changes arising from EPAC or from the Government will be made clear and that people will not be left in a position in which under the present tax policy they are required to make increased tax payments. The Government talked about giving people a $7.60 a week tax refund, but ignored the fact that there was something like a 23 per cent increase in tax. We await with some interest the decisions on a general tax policy that will be placed before us. I hope those decisions will not be put to one side until after the next election which is almost upon us.

With regard to one of the Bills, I said earlier that I was principally concerned about the introduction of a reverse onus of proof. I will deal with the matter in more detail when we move into the Committee stage. In the debate in the House of Representatives on this matter the shadow Treasurer expressed our concern. He sought information and response from the Treasurer (Mr Keating) or the Minister Assisting the Treasurer, the Minister for Housing and Construction (Mr Hurford). I read with some interest and very carefully the brief response that was given by the Minister. It did not entirely cover our concerns; nor did it answer the representations we have had from lawyers and others on this very important matter. When we first expressed our concern about it, it was not in response to the lawyers, the professional body. Our concern was at the reverse onus of proof. I know that it will be said that it exists in other legislation. It was certainly introduced in the Companies Act when we were in government and, as was mentioned by the Minister in the House of Representatives, it is in other legislation. But it is something that needs to be treated seriously and carefully before it is introduced. For instance, I note that the Digest of Bills and bodies that study these matters have drawn attention to this.

Whilst we make it clear that we regard these Bills as Budget Bills and we do not seek in any way to hold up the many changes that arise from the Budget with which we concur, we believe that a second look at the introduction of the reverse onus of proof in this legislation is something that would be worthy of consideration. I foreshadow that following the Committee stage I will seek to have the Taxation Laws Amendment Bill 1984 analysed by a Senate committee so that those in the community who have concerns about it will have the opportunity to put their points of view. In addition, the Government would have more time in which to consider those matters. That will be our intention in the Committee stage.

I have another concern which might be considered small in terms of money with regard to the Income Tax Assessment Amendment (No. 4) Bill 1984. It relates to gifts of fodder and stock that were made following the disastrous Ash Wednesday fires. We accept that we were the Government at the time facing the electors. We made a public commitment that gifts of fodder and stock would be allowable tax deductions. We accept that we made that commitment. We believe that this was a very helpful undertaking in that people who had something that could be shared at that time were encouraged to give some relief. We understand that a public commitment was also made by the then Leader of the Opposition, now Prime Minister, that a Labor government would also make gifts of fodder and stock an allowable taxation deduction. We would have thought that the Government could have used this opportunity to fulfil that commitment and to make the legislation applicable to that year. Therefore, again at the Committee stage, we will move an amendment, which we hope will be supported, which will have the effect of making gifts of fodder and stock that were made following the disastrous fires to be allowable deductions. Again, we will await the outcome of the Committee's response and hope that there will be support for it in this place.

Some other matters may be raised by members of the Opposition. I see that there is a quite lengthy speakers list on the Bills. I will be raising matters on behalf of the Opposition during and following the Committee stage. With those remarks, I hope that the Bills are given a speedy passage because of the requirements of the Government to have this taxation legislation passed before the Parliament rises. I recognise that amended legislation might need to go to the other place. I understand, too, that government amendments will be moved in this place and that will require action in the other place later. With those comments, I commend the Bills for the reasons that I have outlined. I have foreshadowed our opposition to just a few measures that I hope the Senate might support.