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Thursday, 4 April 1946


Mr HARRISON (Wentworth) . I ask the Treasurer (Mr.Chifley) to investigate the way in which income tax assessments are being issued by his department, and to notethe sinister atmosphere surrounding the preparation of assessments. Since thebeginning of thisyeara number of assessments has been received for the year 1944-45 based on income earned up tothe 30th June, 1944, when the pay-as-you-earn system was instroduced. The strange thing which induced me touse the word "sinister" is that no provisional tax was included in the assessments. Honorable members will recall that an assessment ofprovisional tax was regarded as a necessary part of the new system. Seeing that the provisional tax has not been included in the assessment,a doubt arises in the taxpayer's mind as to what is his real indebtedness, andinquiries on this point have elicited some rather strange replies. I have in my hand a letter from a firm of accountants in Sydney whichI propose to make available laterto the Treasurer. After mentioning that he had inquired from the department why no provisional tax was included in' the assessment, the writer goes on -

I was informed that in those cases where an income tax return for the year ended 30th June, 1945, had been lodged with the department before the 1944-45 assessment was issued, no amount of provisional tax was to be included on the 1944-45 assessment.

This means, of course, that these assessments showas the tax due only themisnamed " lag tax " which, as you are aware, is onethird of the tax remaining after rebating 75 per cent. of the tax calculated. That is one twelfth of the calculated tax.

As can be readily seen this utterly defeats the very idea of the pay-as-you-go system, under which it was proposed that the taxpayer should pay the tax on his year's income during that year of income, as these assessment notices will collect only the tax clue on incomederived during the year ended 30th June, 1944.

It can thus be seen that by carrying out this procedure the department is collecting less tax thanit is entitled to, therefore puttinginto practice the scheme to build up enormous secret reserves in the form of provisional tax , for the year ended 30th June, 1 945, which is due and should have been collected with the1944 tax, which obviously will be used solely for thepurposes of windowdressing at election time in the form of tax concessions.

This statement is made as the department is free to issue assessments for this uncollected provisional taxatthewhim of the Government.

The amount so involved can be quite easily seen from the following figures taken from one assessment notice received by me: -

 

According to the notice of assessment this £50 purports to be the taxpayer's liability, but in arriving at his true liability, provisional tax £600 must be added, meaning that in the case of this taxpayer alone the Govern- ment has a secret reserve of £600, which it can call on at any time.

The Treasurer should give his immediate attention to this matter. This is anelection year, and we know that there will be large tax concessions. According to the letter from which I have quoted, one taxpayer's assessment is £600 less than what it ought to be, and itis reasonable to suppose that there are thousands of similar cases. Whyhas this moneynot been called in? Is it so that the Government will have anenormous secret reserve out of which it can distribute largess in this election year?

Mr.Chifley. - The Commissioner of Taxation administers the law passed by this Parliament. He does not act under instructions from me.


Mr HARRISON - I am pleased to know that, because I desire the Treasurer to say whether the statements to which I have referred are correct, and to tell the House why the commissioner has abrogated the law of the country in regard to this matter. If he administers the laws passed by this Parliament, why does he not assess the provisional tax as well as the tax lag? Taxpayers may be called upon at any time to pay an extra amount of tax, and thus be placed in an embarrassing position. Will the Treasurer instruct the Commissioner of Taxation to carry out the law ? If secret reserves are being created there seems to be something sinister ab out the position. What is the reason for the extraordinary position that some taxpayers are not being assessed fully?

Mr.Chifley. - If the honorablemem- ber suggests that I shouldgive instruc tions to the commissioner, I point out that it would be wrong for me to do that.


Mr HARRISON - If he abrogates the law the people should know the reason.







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