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Tuesday, 23 October 1984
Page: 2274

Senator Walsh —On 9 October (Hansard, page 1445) Senator Jack Evans asked the Minister representing the Treasurer the following question, without notice:

Following the ruling of the Federal Court of Australia last Friday week which overturned an interpretation by the Commissioner of Taxation that retread tyres should be taxed at the new tyres rate, will this decision be appealed to a higher court? As the Government has consistently refused to legislate to clarify this anomaly, which puts all repaired items in jeopardy of having a sales tax imposed on them, will it now end this farce and legislate this week to distinguish between new goods and repaired items such as tyre retreads? Finally, will the Government guarantee that at the very least it will immediately refund the sales taxes imposed on tyre retreaders and alleviate the unfair disadvantage imposed by a tax commissioner's wrong interpretation of the law on this group of small businesses?

The Commissioner of Taxation has subsequently issued a ruling, No. S.T. 2087, which directs his officers to continue to impose this tax. I put it to the Minister: If the Commissioner's appeal to the High Court of Australia also fails , will this necessitate the Government legislating retrospectively to ensure that the Commissioner's high handed action is made legal?

The Treasurer has provided the following answer to the honourable senator's question:

There is no anomaly in the decision of the Commissioner of Taxation to rule that the retreading of tyres is manufacture for sales tax purposes. Nor does the decision reached in relation to the retreading of tyres place genuine repair activities in jeopardy of having a sales tax imposed on them. Whether the repair or renovation of an article involves manufacture has always been, and remains, a question of fact. If the degree of repair or renovation work has the effect of producing a new article, then manufacture is involved but if the work done merely restores the article to its original condition and does not change its identity, a repair only will be involved and sales tax will be payable only on any taxable parts used in the repair process. The guidelines used to distinguish between repair and manufacture have operated successfully for many years. The decision on the retreading of tyres was reached on the particular facts of the operations involved and does not affect other repair operations. There is no necessity for the Government to legislate to distinguish between the activities of repair and manufacture.

The Commissioner has confirmed that on 28 September 1984 the Federal Court of Australia, in an action brought by Jax Tyres Pty Ltd, decided that the operation of retreading tyres does not involve manufacture and that the retreaded tyres in question are not liable to sales tax in the manner contended for by the Commissioner. On 5 October 1984 the Court delivered a final order to this effect . The Commissioner has also confirmed that he intends to appeal against the decision and that he has published a Taxation Ruling to this effect. The ruling also advises that taxpayers will continue to be liable for payment of sales tax pending the outcome of the appeal.

In this matter, the Commissioner has done no more than carry out his statutory obligations to administer the sales tax law and, in so doing, he has reached a decision which has been contested by persons affected by it. Those persons have elected to contest the decision in court, which is the normal procedure followed by taxpayers who do not agree with the Commissioner's interpretation of the law. There is nothing unusual about this and the fact that a taxpayer disagrees with a ruling of the Commissioner is not, of itself, a reason for the Government to intervene in the matter.

At this point of time, the appeal will need to run its course. The Government will, as necessary, review its position when the result of the appeal is known.

In the event that the Commissioner's appeal is unsuccessful and the ruling of the Federal Court is to stand, the Commissioner has advised that claims for refunds of tax paid on retreaded tyres will be considered in the context of the provisions in the sales tax law relating to refunds.


Senator Grimes —On 16 October 1984 (Hansard, pages 1738-9) Senator Harradine asked me a question, without notice, in my capacity as Minister representing the Minister for Primary Industry in the Senate. His question concerned the issue of Japanese fishing for southern bluefin tuna (SBT) in the Australian fishing zone (AFZ).

The Minister for Primary Industry has supplied me with the following additional information:

The question of excluding Japanese longliners from those parts of the AFZ where they take SBT has only come to a head in recent weeks following the introduction of a comprehensive and very restrictive program for our own fishermen and the continued reluctance of Japan to take complementary action. Until the second round of access negotiations commenced late in September we were hopeful that Japan would adopt a more co-operative attitude and that it would be possible to retain the existing arrangements with little real modification.

The Japanese reaction was unexpected given their earlier positive attitude to the development of a co-ordinated international approach to the SBT problem and the fact that we were not asking them to cut back their catch. Instead Australia was merely seeking a firm assurance that the Japanese catch would not increase over the next season. Given the fact that we had already taken strong action to substantially cut back out SBT catch, their reaction was extremely disappointing .

At this stage it is by no means certain what impact exclusion of Japanese vessels from waters adjacent to Tasmania will have on the frequency of port calls or on local businesses. While the Japanese tuna industry is predicting that the impact will be severe, the fact remains that access to Hobart is, and is likely to remain, an important part of Japanese operations throughout the southern oceans. For this reason it is expected that port calls will continue.

It is however noteworthy that Japanese port calls at Hobart have already halved since 1980 as a consequence of adverse economic conditions and the poor state of SBT stocks. Without effective and responsible management this trend will continue and probably accelerate to a stage where there are few, if any, calls.

It is correct that there are currently no major Australian fishing vessels operating south of 40* S in the SBT fishery. The issue however is not one of direct competition between Australian and Japanese fishermen. The key element is instead the aggregate impact of fishing on a high migratory resource and for this reason the question of where the tuna is caught is largely incidental to the main concern about the quantity of SBT taken. This is the reason why we are so concerned about Japan's reluctance to impose an overall quota on its SBT fishermen.

There are already extensive consultative mechanisms established to consider and develop fisheries management programs. In the case of the SBT fishery these include the Tuna Task Force, Standing Committee on Fisheries and the Australian Fisheries Council. The Tasmanian Government is represented on each of these bodies and I trust that their representatives will continue to both advise those bodies of the implications of any changes to Tasmanian industry and advise their Tasmanian colleagues of any proposed changes which may have wider economic implications.