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Tuesday, 17 November 1959


Mr HAROLD HOLT (HigginsTreasurer) . - I move -

Definition.

1.   That, in this Resolution, "the Assessment Act " mean the Income Tax and Social Services Contribution Assessment Act 1936-1959, as proposed to be amended by the Income Tax and Social Services Contribution Assessment Bill (No. 3) 1959.

Incorporation.

2.   That the Assessment Act be incorporated and read as one with the Act passed to give effect to this Resolution.

Imposition of Income Tax and Social Services Contribution.

3.   That the tax known as income tax and social services contribution, to the extent that that tax is payable in accordance with section one hundred and twenty-eight b of the Assessment Act, be imposed, and be levied and paid, upon income to which that section applies.

Rate of Tax.

4.   That the rate of income tax and social services contribution imposed by the Act passed to give effect to this Resolution be thirty per centum.

Section 221VB of Assessment Act.

5.   That, for the purposes of sub-section (3.) of section two hundred and twenty-one yb of the Assessment Act, the Act passed to give effect to this Resolution be not deemed to be the Act declaring the rates of income tax and social services contribution payable for the financial year commencing on the first day of July, One thousand nine hundred and sixty, or for any subsequent financial year.

The purpose of this resolution is to declare the rate of income tax and social services contribution payable in the form of a withholding tax on dividends. Under a measure associated with this resolution, it is proposed that the withholding tax apply in relation to dividends derived by nonresidents on or after 1st July, 1960.

As indicated in my Budget Speech, it is proposed that the general rate of withholding tax on dividends paid by an Australian company to overseas investors be 6s. in the £1. In this connexion, it will be recalled that Australia has entered into reciprocal taxation agreements with the United Kingdom, the United States of America and Canada. These agreements contain provisions placing a limit upon the rate of tax that residents of those countries may be called upon to pay on dividends paid by Australian companies.

In the generality of cases, the rate of withholding tax from dividends paid to residents of those countries will be 3s. in the £1. This matter is governed by the provisions of the agreements and of the Income Tax (International Agreements) Act that gives the force of law to the agreements. For this reason, it is unnecessary to specify in this resolution a special rate of withholding tax on dividends flowing to countries with which Australia has concluded agreements. The resolution accordingly declares only the general rate of 6s. in the £1.

The introduction of withholding tax on dividends will not affect the taxation of profits out of which the dividends are paid. Those profits will continue to bear the ratesof tax declared by the Parliament.

I submit the resolution for the consideration of the committee.

Progress reported.







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