Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 8 December 1960

Mr WIGHT (Lilley) .- Mr. Temporary Chairman,I want to discuss proposed new section 51aa of the principal act and in particular sub-section (11.). This subsection appears to afford some protection to companies which have involved themselves in the raising of finance for specific developmental projects by protecting them from the application in retrospect of this proposed new section of the act. Paragraphs (a), and (b) of the sub-section amount to an assurance that there will not be discrimination against firms which have taken firm action towards the raising of £nance for specific developmental projects; but I feel that there is some degree of cloudiness in the definition on which this provision depends.

It is true, as the Treasurer (Mr. Harold Holt) says, that this provision will operate for only six months and therefore any firm will be affected to the extent of only 50 per cent, of the funds which it has raised by the issue of notes. If the rate of interest is only 8 per cent., then the tax levied on the company will be only 8 per cent, of 50 per cent, of the value of the notes issued. I think that greater clarity could be given with respect to contractual commitments. Sub-paragraph ti) of paragraph (a) of sub-section (11.) contains the words - the company was hound by agreement to borrow a sum of money specified in the agreement; . . .

Sub-paragraph (ii) is in these terms - the company has borrowed that sum of money or a part of that sum; . . .

If the Commissioner of Taxation is satisfied as to these conditions, companies will receive the benefit. But the point is: If arrangements have been made for financial assistance from a bank on a temporary basis, will such arrangements be regarded as an agreement under sub-paragraph (i)? Or must the company have actually borrowed some part of that money against a note issue which may not be made until January or February of next year? Paragraph (b) of sub-section (11.) is in these terms -

(i)   on or before that date, the company made an offer to borrow a sum- of. money specified in the offer; and

(ii)   under an agreement or agreements arising from the acceptance of that offer, the company has borrowed that sum of money or a part of that sum,

As I have said, the money may not have actually been borrowed.

I feel that the amendment proposed by the honorable member for Wentworth (Mr. Bury) will clarify the position as it is stated in the bill. A firm may have had a meeting of its board, notified its brokers and made all the necessary arrangements. Contracts may have been prepared to give effect to the company's plans for development, but those contracts may not actually have been signed. The company may actually have committed itself to building contracts or to the purchase of machinery or other equipment needed for the expansion of its business. As the bill stands, such conditions do not appear to be sufficient to enable the company to receive the benefit of subsection (11.) of proposed new section 51aa of the principal act. I should like the Treasurer to give an assurance that in such a situation he would interpret the expansion activities of a firm as indicating that it has in good faith entered into a contractual obligation prior to 15th November last.

If the Treasurer can give the committee an assurance that companies in that position will not be prejudiced, I shall be quite happy with the bill as it is drafted. But I do not think that the Treasurer can in fact give such an assurance. 1 feel that there is some haziness about the retrospective application of the provisions of the bill. It seems to me that in the absence of an assurance by the Treasurer such as I have mentioned companies in the circumstances which I have described will be prejudiced. Therefore, in the absence of an assurance from the Treasurer, I shall have to support the amendment.

Suggest corrections