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Wednesday, 20 May 1942

Mr HOLT (Fawkner) .- One of the principal purposes of this bill to amend the Estate Duty Assessment Act, is to deal with problems arising in relation to the estates of deceased service men. T raised this problem on behalf of the Opposition when the principal act was under consideration towards the end of last year. The Treasurer (Mr. Chifley) promised to look into the matter and, if necessary, introduce amending legislation. This bill is th.e fruit of that promise. We pointed out on that occasion that, as the legislation stood, there was an exemption of £5,000 in respect of the estate of a member of the fighting services who was killed in the course of duty, but that, if the value of an estate exceeded £5,000 by only £1, the whole duty applicable to the estate would be collected. The Government has met our wishes to a degree by providing that the first £5,000 of value of an estate shall be free of duty, but that does not entirely satisfy. A man does not realize his normal expectation of life when he dies on active service, and the Treasury receives duty on his estate years earlier than would normally be the case. This problem was met in the last war by Parliament providing that no duty would be payable on the estates of persons killed on active service. The British Government exempts from duty the first £5,000 of value of a deceased service man's estate and deals with the remainder in accordance with a formula which ought to be adopted by the Commonwealth Government. If a man's expectation of life is shortened by, say, twenty years, the duty is levied on the amount which on compound interest at 3 per cent, would, after twenty years yield the amount of the present value of the estate. That is a logical and fair approach, to the problem. I understand that the Treasury has only two objections to the British practice, first, that it would involve some loss of revenue, and, secondly, that administrative difficulties would arise. As to the first objection, there could be little loss of revenue because very few service men would have estates to the value of £5,000. We have come to a sorry pass if in order to finance our war effort we have to rely on imposing duty on the estates of deceased soldiers. As to the second objection, little administrative difficulty could arise because of the fewness of the cases that would occur. The Treasury has devised a similar formula for dealing with life assurance policies in favour of widows on which the premiums had been paid by the husbands. There would be many more cases involving assurance policies than cases of ordinary estates. I impress upon the Treasurer the wisdom and equity of the scheme which has worked with success in Great Britain, and should on a proper view be equally meritorious and equally applicable in this country.

One defect of the bill is the omission of any provision dealing with civilians who may be killed as the result of war operations. In Great Britain, legislation passed in 1941 extended the relief available in the case of men of the services to civilians generally. That problem has not yet assumed any considerable dimensions in Australia, because so far we in this country have been fortunate in that civilians generally have escaped injury from enemy action, and, consequently, no great hardship has arisen. But on the assumption that our future in this respect will not be so happy. I submit that we should follow the British practice and apply a similar formula in respect of civilians who may be killed by enemy action in this country.

Cases of multiple deaths among civilians should be provided for. The bill makes provision for the multiple deaths of members of the services. Should one of two brothers die as the result of war service and his estate pass to the other, who also dies as a result of war service, there is no duplication of estate duty. In that respect we have adopted the British practice; but Great Britain had also before the war made special provision to meet cases of multiple deaths among civilians. The British law provides that should the succeeding death occur within twelve months of the first death, there shall be a remission of duty do the degree of 50 per cent. Should the succeeding death occur in the second year following the first death, the remission is 40 per cent. ; should the second death occur in the third, fourth or fifth year, the remission of duty is 30 per cent., 20 per cent., and 10 per cent, respectively. Honorable members who have had to act as trustees or executors of estates will be aware of the difficult problems of administration which arise when an estate of any considerable size has to be dealt with for probate purposes. Where that problem has to be faced for a second time in a space of a few years the difficulties become much greater. That situation has been mot in Great Britain in the manner that I have indicated, but no similar approach to the problem has been made in Australia. In that respect our legislation is incomplete. I emphasize these matters at this stage because of the change which has taken place during recent years in the rates of duty applicable to deceased estates. They did not have the same importance in pre-war years, because the rate of duty on deceased estates for federal purposes remained constant for a number of years, with the result that the average revenue from this source remained at about £1,500,000 per annum. In either 1940 or 1941, when the honorable member for Warringah (Mr. Spender) was Treasurer of the Commonwealth, the rate of duty on deceased estates was raised sufficiently to increase the revenue from that source to approximately £2,350,000. Legislation introduced by the present Treasurer to give effect to his latest budget proposals will, it is expected, bring to the Treasury another £650,000 annually from that source. Thus, it will be seen that in a period of about two years the estimated annual collections from estate duty have doubled. I ask honorable members to reflect on this situation, because if they do so they will find that these increases of duty represent heavy inroads upon the values of deceased estates. Honorable members will probably be astonished to learn that if the rates of estate duty which apply in the most heavily taxed Australian State are added to the estate duty imposed by the Commonwealth, the total collection from a deceased estate in this country is much greater than in Great Britain. I admit that, that fact astonished me, as I had always thought that estate duties in Great Britain were much heavier than in Australia. An estate of £30.000 in Great Britain would be subject to duty amounting to £3,900 compared with £5,522 for a similar estate in the highest taxed Australian State. The disparity is even more striking in respect of estates of higher value. The collection by the British Treasury from an estate of £100,000 would be £25,700, whereas in Australia it may reach £38,980. Some honorable members may think that, even with those deductions, the beneficiaries of a big estate can still be regarded as fortunate, but if we examine the situation as a practical problem of administration, itwill be seen that considerable hardship may arise when exactions are made on that scale.

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