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Tuesday, 29 September 1942


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

That at the end of the clause the following words be added: - "; and (b) by adding at the end thereof the following sub-sections: - (5.) After the commencement of this subsection, any election in pursuance of subsection (3.) of this section shall be made in writing, signed by the public officer of the company, and notified to the Commissioner -

(a)   where the election commences to apply in ascertaining the distributable income of the year ended on the thirtieth day of June, One thousand nine hundred and forty-one or of the year ended on the thirtieth day of June, One thousand nine hundred and forty-two, or the accounting period adopted under this Act in lieu of either of those years - on or before the thirty-first day of December, One thousand nine hundred and forty-two, or within such further time as the Commissioner may allow; and

(b)   where the election commences to apply in ascertaining the distributable income of any subsequent year - on or before the date of lodgment of the return for that year or within such further time as the Commissioner may allow. ( 6. ) Where a private company makes or has made an election under sub-section (3.) of this section, the income tax payable under this Act in respect of income derived during the year ended on the thirtieth day of June, One thousand nine hundred and forty-two, or the accounting period adopted under this Act in lieu of that year, shall, for the purpose of this section, be calculated as if in paragraph (a) of the Seventh Schedule to the Income Tax Act 1942 the words " forty-eight pence " were substituted for the words " seventy-two pence ' ".

Under sub-section 1 of section 103 of the principal act, a private company, in arriving at its distributable income for the purposes of private company tax, is entitled to deduct Commonwealth income tax and State income taxes which have not been allowed, or are not allowable as a deduction in arriving at its taxable income and which are paid during the year of income. State income tax paid in respect of the financial year 1941-42 is not an allowable deduction, and is accordingly allowed as a deduction in the year in which it is paid, in arriving at the private company's distributable income. Under sub-section 3 of section 103, a private company is given the right to elect that in lieu of deducting Commonwealth ordinary income tax paid during the year of income, it may deduct Commonwealth ordinary income tax payable in respect of income of the year of income. Under the uniform income tax plan the Commonwealth rate of ordinary income tax payable by companies was increased to 6s. in the £1. This rate of 6s. represented, in effect, the existing Commonwealth rate of 4s., plus an average rate of 2s. to replace the State income tax formerly payable by companies. In the great majority of cases the State income tax assessed for the financial year 1941-42 would be paid by the companies during the year ended the 30th June, 1942, or the accounting period substituted for that year, and would thus, under section 103 (1) of the principal act, be deductible in arriving at the private company's distributable income of the year ended the 30th June, 1942, or its substituted accounting period. As mentioned above, however, the private company is entitled to elect that in lieu of Commonwealth ordinary income tax paid during the year of income, it may deduct Commonwealth ordinary income tax payable in respect of the income of the year of income. The effect of this provision therefore is that in arriving at the private company's distributable income for the year ended the 30th June, 1942, or the substituted accounting period, the private company which elects to adopt Commonwealth ordinary income tax payable in respect of the income of the year of income in lieu of Commonwealth ordinary income tax paid during that year, is entitled to receive the following deductions : -

(a)   State income tax paid during the year; and

(b)   Commonwealth ordinary income tax payable in respect of the income of the year calculated at the rate of 6s. in the £1.

Amendment agreed to.

Clause further verbally amended, and, as amended, agreed to.

Clause 16 -

Section one hundred and thirty-eight of the Principal Act is amended -

(a)   by omitting the word "thirty" and inserting in its stead the word "ten"; and







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