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Wednesday, 17 December 1941


Mr CHIFLEY (Macquarie) (Treasurer) . - by leave - I move -

That the bill bc now read a second time.

Honorable members have already been advised of the purpose of this measure, and have also been given a broad statement of its provisions. In general outline, persons in receipt of an annual income of over £156 ,are now being called upon to make a special contribution to aid- the country in the prosecution of the war effort. The nature of the tax is denoted by the title to the principal part of the bill, that is, " war tax ". The tax will be levied upon all persons, other than companies, resident and non-resident, who derive a war tax income, and the ordinary machinery of the Income Tax Assessment Act will be used for the purposes of the assessment and collection of the tax. Whilst no liability will rest upon a person whose income does not exceed £156, the tax is to be levied upon the total income when it exceeds £156. To meet cases in which the income is slightly in excess of £156, there is a saving provision in the taxing act which ensures that the tax will be not greater than onehalf of the income in excess of £156. The liability for war tax is to be based upon the same amount of assessable income as for ordinary income tax purposes. Income which is assessable for income tax is to be liable to war tax, and income which is exempt from income tax is likewise to be exempt from war tax. At this point, the basis of the war tax differs from the ordinary income tax in that deductions of a concessional nature which are allowed for income tax purposes are to be excluded from the calculation for war tax purposes. The general conception of the measure is that the war tax should be levied on the income of a taxpayer actually available to him for his expenditure. The deductions to be excluded are State income tax, rates and taxes on nonincomeproducing property, subscriptions to trade associations and trade unions, charitable gifts, election expenses of members of Parliament, expenditure of a capital nature allowed to primary producers on wire netting, and other improvements to pastoral properties. Other deductions which it is proposed not to allow are those for wife, children under sixteen, mother, medical and funeral expenses, life insurance premiums, contributions to pensions funds, losses of prior years, and the statutory exemption. A deduction will, however, be allowed in respect of the Commonwealth income tax payable on the income on which the war tax is levied. In providing for this deduction, the Government has taken the view that Commonwealth income tax absorbs so much of the income of the individual to-day that the liability for the war tax should be determined only after allowance had been made for the Commonwealth tax payable on that income. The bill recognizes the domestic responsibilities of a taxpayer by the allowance of concessions in respect of dependants. These concessions will take the form of an annual rebate of tax of £2 12s. for each dependant, irrespective of the amount of the taxpayer's' income. The dependants in respect of whom the rebate will be allowed are wife, dependent mother, and all dependent children under the age of sixteen .years. One-half only of these rebates will be allowable in the present financial year, as the tax will be in operation for only six months of this year. For this reason, also, the rates of tax to be applied in the current year are only one-half of those specified for a full year. A provision has been included in the bill which will have the effect of exempting from both ordinary income tax and the special war tax the dependants' allowances paid by the Commonwealth in respect of the wife, children and other dependants of members of the fighting forces. These allowances are not received by the members of the forces, and it is inappropriate that they should be taxed as his income. The bill also contains a concession to members of the forces by limiting liability to war tax to those of the personnel of the forces whose war tax income exceeds £200. I commend the bill to honorable members.







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