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Tuesday, 25 November 1941


Mr LAZZARINI (Werriwa) (Minister assisting the Treasurer) . - I move -

That after the word "repealed" the following words be added: - " and the following sections inserted in its stead : - 160. - (1.) Where in respect of the income of anyyear of income the sum of the tax assessed under this Act and under the Wartime (Company) Tax Assessment Act 1940- 1941 and the income tax imposed under any law of a. State or of a Territory being part of the Commonwealth exceeds ninety per centum of an amount ascertained by adding to the taxable income of the taxpayer the amount of any deductions allowed under the provisions of paragraph (c) of sub-section (1.) of section seventy-two of this Act, a rebate shall be allowed of so much of that excess as bears to that excess the same proportion as the sum of the tax assessed under this Act and under the War-time (Company) Tax Assessment Act 1940-1941 bears to the sum of those taxes and the income tax imposed under any law of any such State or Territory. (2.) For the purposes of the last preceding sub-section, any reference to tax assessed under this Act, or under the War-time (Company) Tax Assessment Act 1940-1941, or to any income tax imposed under any law of a State or Territory, shall not include amy additional tax for which the taxpayer becomes liable by reason of any evasion or non-compliance with any provisions of this Act, the War-time (Company) Tax Assessment Act 1940-1941 or the law of the State or Territory, as the case may be. 160a. - (1.) Where a taxipayer has, in the year of income, paid calls on shares owned by him in a mining company or syndicate carrying on mining operations in Australia for gold, silver, base metals, rare minerals or oil, or in any company carrying on afforestation in Australia as its principal business,he shall be entitled to a rebate in his assessment of the amount obtained by applying to the amount of the calls (not exceeding' the amount of the taxable income of the year of income) a rate equivalent to - (.a) where the taxpayer is not a company and the taxable income is derived wholly from personal exertion - onethird of the rate of tax payable for the year of tax on a taxable income from personal exertion equal to the taxable income of the taxpayer ; (ifr) where the taxpayer is not a company and the taxable income is not derived wholly from personal exertion - one-third of the rate of tax payable for the year of tax on a taxable income from property equal to the taxable income of the taxpayer; or

(o)   where the taxpayer is a company - one-third of the rate of tax payable by companies for the year of tax. (2.)' For the purposes of paragraph (c) of the last preceding sub-section tax payable by a taxpayer which is a company shall not include -

(a)   any tax imposed by any Act as a super tax on part of the taxable income of a company; or

(6)   any tax assessed under the provisions of Part IIIA, of this Act.'".

On Wednesday last I circulated to honorable members a copy of an amendment to clause 22 of the Income Tax Assessment Bill, which I proposed to move in order to give effect, to the Government's decision to provide for an abatement of income tax in any case where the effective combined rates of Commonwealth and State taxes exceed 18s. in the fi. It has been found, however, that the amendment as drafted does not correctly express the Government's decision, and it has been replaced by the amendment now circulated to honorable- members. The Government's proposal is that in those cases where the combined weight of Commonwealth and State taxes on the taxpayer's income of the year exceeded 18s. in the £1 relief should be given to the taxpayer concerned according to the proportionate weight of tax imposed respectively by the Commonwealth and the State. For example, if the combined weight of the tax on each £1 of income is 21s., composed of 14s. Commonwealth tax and 7s. State tax, the relief to be given by the Commonwealth will be 2s. in the £1. As State income taxes paid during the year of income are allowed as a deduction in arriving at the Commonwealth taxable income, it is necessary that these taxes should be added back to the taxable income in order to determine whether the total weight of Commonwealth and State taxes is more than 18s. in the £1. The only difference between the amendment now circulated and the amendment previously circulated is the provision which is being made for the adding back to taxable income of the taxes paid that have been allowed as deductions in arriving at the taxable income. The rebate will be allowed where the combined Commonwealth and State taxes payable on income of the year of income exceed 90 per cent, of the taxable income before deduction of State income taxes paid- during the year is allowed. The proposed rebate will be applicable to companies as well as to individuals. It rests with the States to contribute their proportion of the tax abatement so that the Commonwealth and State taxes on income shall not exceed 18a. in the £1.

When dealing with clause 12- b of the bill, I explained to the committee that the omission of paragraph d' of subsection 1 of section 78 of the principal act, and the insertion of new section 160a, implemented the recommendation of the committee of members on the subject of calls in mining companies. The type of calls specified in section 78(1) d of the principal act are repeated in the proposed section 160a. The new section provides for a rebate of tax of the amount obtained by applying to the amount of the calls one-third of the rate of tax payable- on an amount of taxable income equal to the taxable income of the taxpayer. Where the taxable income is derived from personal exertion only, the rebate is calculated at personal exertion rates. Where the income consists of property income, or partly of personal exertion and partly of property income, the rebate is calculated at property rates. In the case of a company, the rebate is one-third of the flat rate of normal tax payable by companies. Thus, under the proposed 1941-42 rates, the rate of company rebate would be onethird of 3s., which equals ls. in the £1 on the amount of calls paid to mining companies in the income year. Subsection 2 of new section 160a makes it clear that the rate of company tax referred to is the rate of normal tax, not

The rate applicable to other taxes which may be assessed to a company, such as sit per tax and tax assessed under Part I. 11a of the act. The proposed section provides that the amount of the calls on which rebate is to be granted is not to exceed the amount of taxable income. In section 78(1)d of the principal act, there was a limitation by which the deduction for calls could not exceed the amount of income remaining after deducting from the assessable income other allowable deductions. The new section will apply to assessments made for the financial year 1941-42 (based on income derived during the income year ended the 30th June, 1941) and succeeding years, and this will bc provided in clause 28 of the bill.







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