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Thursday, 4 May 1961

Mr HAROLD HOLT (HigginsTreasurer) . - by leave - I move -

That the bill be now read a second time.

As I have just explained, this bill is the second of two taxation measures to introduce taxation concessions as financial incentives to export.

This bill proposes to authorize the allowance of a rebate o£ pay-roll lax which will be available not only in relation to increases in the export of physical goods but also where additional income is earned from the grant or assignment of rights exercisable overseas in respect of patents, trade marks, designs and copyright. The rebate is to apply in relation to increases in exports during the current financial year 1960-61 and for each of the three succeeding financial years. The amount of the rebate will be ascertained from a formula set out in the bill.

Perhaps the simplest way of expressing the matter orally is to say that the fraction " increase in export sales over the gross receipts of the trade or business carried on in Australia " will be applied to the pay-roll liability of the year for which a rebate is claimed. The resultant amount will be multiplied by \2\ in order to arrive at the rebate allowable. For the purposes of these calculations, interest, dividends, rents and other receipts in the nature of income from property will be excluded from the gross receipts of the business.

The formula means that if the value of a firm's exports increases by I per cent, of its gross income from Austral ian trade or business, it will be entitled to a rebate of 121 per cent, of its pay-roll tax liability. This applies proportionately so that if the increase in export sales in a financial year is not less than S per cent, of gross receipts from Australian trade and business, the total pay-roll tax liability will be rebated. Stated in broad terms, entitlement to a rebate will be available in the first place to persons who by manufacture, production, assembling, processing, sorting and grading, or by packing in an original container, bring goods into the form or condition in which they are exported.

It is, however, a feature of the proposals that a producer having the primary entitlement to a rebate, and who had increased his export sales, will be entitled to issue an export certificate to a person who has supplied components physically included in the final product exported from Australia. The export certificate may specify an amount in relation to the value of the components supplied and the supplier of the components will be entitled to have that amount treated, for the purposes of any rebate he may claim, as an increase in his export sales for the year concerned.

Each producer of goods that have been exported will be entitled to specify in export certificates for any year amounts which, in total, are no greater than tie increase in his export sales for that year. The amounts specified will, however, be deducted from the producer's increase in export sales for the purpose of calculating the amount of any rebate to which he may be entitled. A corresponding procedure will be available where a supplier of components wishes to issue a certificate to a person who has supplied to him materials physically included in the final product.

The bill does not contain provisions requiring the issue of export certificates and the question whether a certificate should be issued will be a matter for determination by the person having the prior right to claim a rebate. The amount of an increase in export sales will be determined by comparing the export sales of the year for which a rebate is claimed with the average of the annual export sales of a two-year base period that ended on 30th June, 1960. In order that a measure of flexibility may operate in the ascertainment of the base period export sales where abnormal circumstances have applied in that period, producers of goods exported will be entitled to have the amount of those sales reviewed by an independent taxation board of review.

The bill includes a number of special provisions relating to marketing authorities which export goods, to gold produced in Australia and to procedures by which producers may obtain particulars upon which to base claims for rebates in respect of goods exported by an export merchant. A detailed explanation of the provisions of the bill is given in the explanatory memorandum which will be available to honorable members.

I should, however, add that, in addition to authorizing the rebate in relation to exports, the bill proposes to extend the list of international organizations exempt from pay-roll tax. The various specialized agencies of the United Nations Organization and the South Pacific Commission have for a number of years been entitled to such an exemption. It is now proposed to add to the list a further three organizations of which Australia is a member. These are -

The International Atomic Energy Agency The South-East Asia Treaty Organization The Customs Co-operation Council.

At present, none of the three organizations pays salaries or wages in Australia that attracts a pay-roll tax liability and the amendment will not involve a cost to revenue.

I commend the bill to honorable members.

Debate (on motion by Mr. Crean) adjourned.

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