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Friday, 10 December 1965

Mr HAROLD HOLT (HigginsTreasurer) . - I move -

That the Bill be now read a second time.

The purpose of this Bill is to declare rates; of tax payable for the current financial year on the income of certain superannuation funds, of certain trust estates and of members of partnerships who lack, or are deemed to lack, real and effective control of their shares of partnership income.

These rates are being declared in accordance with legislation introduced last year after the Government had considered the report of the Commonwealth Committee on Taxation 1959-61 drawing attention to the tax avoidance resulting from the exploitation of provisions of the law relating to superannuation funds, trust and partnerships.

As to the taxable income of a superannuation fund that is not exempt from tax, the Bill declares a rate of tax of 10s. in each £1. This rate will not apply to the very large number of funds of the traditional type that will undoubtedly continue to qualify for exemption so long as they comply with the " 30/20 " public security investment rule. I should mention that the rates of tax payable by a superannuation fund on investment income that is taxable because of the fund's failure to comply with the investment rule are not being changed.

As to income from a share in a partnership over which a person lacks, or is deemed to lack, real and effective control and disposal, the Bill imposes a rate of further tax sufficient to bring the aggregate rate on the income up to 10s. in each £1. If a taxpayer's average personal rate of tax is 10s. or more, this further tax will, of course, not be imposed.

As to income of a trust estate other than a deceased estate to which no beneficiary is presently entitled and which is not taxed as if it were the income of one individual, the rate declared by the Bill for the purposes of the 1964 legislation is 10s. in each £1.

Put very briefly, the over-riding purpose of the Bill is to impose on the classes of income mentioned a rate of tax which, the Government believes, will deter the tax avoider without adversely affecting the very large proportion of citizens who meet their tax liabilities without resorting to devices which operate unfairly against the general body of taxpayers. I commend the Bill to the House.

Leave granted for the debate to continue.

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