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Wednesday, 24 November 1965

Dr FORBES (Barker) (Minister for the Army and Minister Assisting the Treasurer) . - Mr. Speaker, I do not want to say anything about the points made by the honorable member for Melbourne Ports (Mr. Crean). As I understood him, he was not specifically objecting to the increase of 21 per cent, in rates of personal income tax. The Opposition's objection to this measure is based on a traditional view of the income tax structure. The Government's attitude to the Opposition's view has been stated in this House many times. Therefore I do not believe that in the context of this Bill it is either desirable or appropriate for me to answer in detail the points made by the honorable member. However, I should like to say something about the speech made by my friend, the honorable member for Sturt (Mr. Wilson), who very sincerely has indicated that he opposes the Bill because he objects to the proposed rate of tax of 10s. in the £1 to be levied on superannuation funds that do not meet the tests laid down in the tax laws. The Government understands and comprehends the point made by the honorable gentleman. It understands also the sincerity with which he advances the point of view that he has put to the House so eloquently tonight.

I should like to point out to the honorable member that the proposed amendment of the law will not result in a fund's being taxed unless it fails to meet reasonable tests that are laid down in the law. This is the important point. One might conclude from what the honorable gentleman has said that this tax rate of 10s. in the £1 will apply to a majority of superannuation funds or even to all of them. The assessment measure passed last year specifically exempts from tax funds meeting the tests that I have just mentioned. The proposed tax rate of 10s. in the £1, which is the subject of the honorable member's objection, will in practice be payable only by funds that fail to satisfy the tests laid down in the law. He has indicated, quite rightly, that he has been one of the most constant promoters of traditional type superannuation funds over a long period - I think, about the length of my life time, or about 40 years. These traditional type funds to which he has referred will have little, if any, difficulty in meeting the tests laid down so far as they apply to funds organised by employers for the benefit of their employees, for which funds the proposed rate of tax will seldom have any significance. As the honorable gentleman placed all his emphasis on the effect of this proposal on employees, I consider that this is a significant point to make. Where the tests are not satisfied it will not be practicable to relate a tax rate to the incomes of the members of a fund. Accordingly, it is necessary to impose a fixed rate. This is done having in mind that the funds affected are those failing to satisfy the tests.

I emphasise again, with particular reference to funds affecting employees, that very few, if any, will be unable to satisfy the tests. This applies particularly to the traditional type of fund. Since those are the funds that are to be affected, the Government considered that the income accumulated by them should bear the same rate of tax as is payable on the undistributed income of private companies, that is, a rate of 10s. in the £1. A fund which becomes liable to that rate is, of course, entitled to alter its rules and practices so as to qualify for exemption. Therefore, the employees who are members of bona fide funds will not, in practice, be adversely affected by the new proposal. Although the Government sympathises with the point made by the honorable member for Sturt, it cannot accept the objections that he has raised to the measure.

Question put -

That the Bill be now read a second time.

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