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Tuesday, 9 October 1984
Page: 1463


Senator WALSH (Minister for Resources and Energy)(3.48) —Madam Temporary Chairman, correct me if I am wrong, but I think the Opposition's amendment of similar purport has already been moved.


Senator Messner —No. Senator Jack Evans's amendments have actually been moved at this stage.


Senator WALSH —Does the Opposition intend to move an amendment?


Senator Messner —We intend to move an amendment.


Senator WALSH —Thank you. I am not sure whether I should say this but I am advised that the Australian Democrats amendments appear to be technically defective. But they have broadly the same intention as the amendments to be moved by the Opposition. The Government will be opposing both amendments. I gather that if what has been said in the debate already is correct they will, however, be carried.

Let me state my reasons for the rejection. Every honourable senator on the other side of the chamber has adopted populist, gimmicky response to support the argument that the operation of this concessional change to the Income Tax Assessment Act should be backdated to 1982-83 so that people who donated fodder in the wake of the Ash Wednesday bushfires of 1983 would be able to take advantage of the concession. Superficially, I suppose that that might seem to have some merit. But it opens the question: How far back do you want to go? I can remember bushfires in Western Australia in 1950 when exactly the same thing happened. Most of the lower south-west of Western Australia was burnt out and large quantities of fodder donated by farmers were trucked down from the wheat belt. Once we have embraced the principle of a retrospective operation, just how far back do we go if it is accepted that there was an anomaly in the past? That is the principal reason for the Government opposing all the amendments. One or two speakers on the other side of the chamber attempted to amend the Income Tax Assessment Amendment Bill to make the concession effective in the 1982-83 financial year. Reference was made to statements which had been made in the Senate by me in 1983 when another taxation amendment Bill was before the Senate. I have checked the statement that I made. My recollection of the facts concerning that statement was correct. In answer to a question on this subject asked by Senator Harradine on 25 May 1983, I said:

I can, however, see that an argument could be mounted for making a distinction between the two types of donations.

That is, donations in cash and donations in kind. I continued:

Expenses incurred by a farmer in producing the two commodities that Senator Harradine has cited-fodder and animals-have been tax deductible. If, in addition to that, the item that was donated was allowed as a tax deduction at full market price there would be an element of double counting. Whether that is the basis for the Taxation Office's distinction, if in fact it draws such a distinction, I do not know. But I just raise the point that that could well be the case. I will seek a definitive answer from the Minister.

I have acknowledged that some sort of case can be made but I have added a caveat to that acknowledgment, and I think it is important to note that in the record for the reason I am about to move into, particularly as Senator Harradine-I think he named me-cited my comment in the Senate last year as his justification for retrospectively extending a concession. Indeed, he said that it would not be inconsistent with the Government's attitude to tax measures if this measure were to be operative from 1 July 1982, having previously referred to a statement I made.

I will be very interested to see whether Senator Harradine applies the same principle in a less rigid form when some other legislation comes before the Senate. The Treasurer (Mr Keating) has issued a statement saying that he intends to take action against trust stripping arrangements, in particular an arrangement under which a trust was set up and the income from that trust was passed on to a subsidiary trust, the beneficiary of which was a charity, and a tax deduction claimed. The appeal by the trust beneficiaries on whom the Commissioner of Taxation had served a notice of assessment was successful on the grounds that it had been donated to a charity, which in one sense it had. The catch was that the money was not actually paid to the charity for 80 years and the $100,000 receivable by the charity in 80 years time at a 10 per cent discount rate has a net present value of less than $50. In other words, the real value of the donation to the charity was $50 but the deduction effectively claimed by the taxpayer was $100,000 and, on the marginal tax rate, the amount of tax evaded by that obviously highly artificial manoeuvre was $60,000.

The previous Treasurer issued in 1982 a Press statement-I have not been able to track down the precise Press statement-in which he said that it was believed that trust stripping operations of that nature would be voided and picked up by Part IVA of the Income Tax Assessment Act which became operative on 28 May 1981 and added that, if that proved to be wrong, that is, if such a highly contrived means of evading tax were not voided by Part IVA, the previous Government would introduce legislation to close the loophole. It was subsequently shown that the loophole was there and that indeed it was effective. The previous Government did not introduce the legislation forecast by the previous Treasurer, but the present Treasurer issued a statement some time ago saying that this Government would introduce such legislation. Unfortunately, it seems unlikely, because of the pressure of parliamentary business, that the legislation will be voted on in this session of Parliament.

To relate that back to what I was saying earlier, I will be extremely interested to see whether the principle which Senator Harradine enunciated last night, that is, that because I gave qualified support-and I stress 'qualified'- to the notion that there was an anomaly in the Income Tax Assessment Act with respect to donations made in kind instead of donations made in cash, the latter being tax deductible and the former not, there was an obligation to backdate to before the time of that statement the benefits of the concession. I will be very interested to see whether, when the trust stripping evasion Bill comes before the Parliament, Senator Harradine adopts the same principle and at least supports legislation that backdates to the financial year in which the former Treasurer made his statement about trust stripping the recoupment of tax from people who manipulated the tax laws to their own benefit in that way. I will be extremely interested to see whether Senator Harradine votes for that legislation when it comes before the Senate, as he has indicated he will vote for this amendment, or whether he digs up some spurious excuse as he has done in the past for adopting an inconsistent approach to taxation measures and for switching his vote.

I will also be very interested to know-I hope that the Tasmanian media notes this in particular-now that Senator Harradine has established a party recognised by the Electoral Act, whether the person standing in the name of the Brian Harradine Party, Mrs Venn, should she be elected to the Senate, will adopt Senator Harradine's voting practices on retrospective tax legislation or whether she will adopt some other practices. Indeed, that is a question which I think the people of Tasmania are entitled to have answered. Will Mrs Venn, should she be elected to the Senate, vote, for example, for the Bill twice rejected by this Senate after the present Government introduced it to repeal section 3 (12) of the Fraser Government's tax recoupment legislation; will she vote for a Bill consistent with the principles which Senator Harradine expressed last night to close off tax avoidance or evasion through trust stripping, backdated at least until the financial year in which the former Treasurer made his statement on the subject-he made it on 11 May 1982; I have just received a copy; or will she vote in different ways at different times on what in one case was exactly the same piece of legislation or in other cases were closely related pieces of legislation and give different reasons for voting in different ways at different times, as Senator Harradine has done? I invite the Tasmanian media to take up with Mrs Venn whether, if the Bill to repeal section 3 (12) of the Fraser Government's 1982 tax recoupment legislation is presented in the Senate next year and she is a member of that Senate, she will vote for it; whether she will vote for the legislation forecast by the present Treasurer to recoup tax evaded because of the manipulation of trusts, notice of intention of which was given by the former Treasurer in the financial year 1981-82; and, if the media wishes to extend the question a bit further, whether she will vote for any of the other tax recoupment measures which have been introduced by the present Government and rejected by the Senate.

Amendments negatived.