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Wednesday, 8 June 1994
Page: 1518

Senator PANIZZA (4.41 p.m.) —I simply want to ask a couple of questions. I had a discussion with the tax department—that discussion will not go into Hansard, unless there is an automatic plug into the minister's office—about what happens in the case of a PAYE employee who has provisional tax liabilities as well. It seems to me that that person could be hit with a double whammy. There would be the normal PAYE tax, then there is other income liable to provisional tax. We should bear in mind that provisional tax in the first year brings one year forward so that that person would virtually be paying twice. Can the minister give me an assurance that that person's liability will be as if both of those incomes—whether liable to PAYE or provisional tax provisions—come to the same amount? That is my first question.

  In case I do not get the call again in a hurry, I will ask my second question. In a situation where a taxpayer, with a HECS debt and liable to both PAYE and provisional tax, has a negative gearing aspect in his or her return, what happens? For example, if that person has an income in round figures of $40,000, and has $10,000 of negative gearing—taking the $10,000 from the $40,000 leaves a balance of $30,000—is HECS calculated on the $40,000 or is it calculated on the $30,000?

Senator Bell —It is on the $40,000.