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Friday, 10 December 1965

Mr WILSON (Sturt) .- I cannot support this Bill although I am whole- heartedly in favour of legislation being introduced to prevent tax avoidance. I cannot support the Bill because it imposes a penalty tax on bona fide superannuation funds and then leaves a discretion to the Commissioner of Taxation to exempt those funds from the operation of this legislation. The Bill flagrantly flouts the principle, if not the letter, of section 55 of the Constitution which provides that laws imposing taxation shall deal only with the imposition of taxation. This Bill seeks to control superannuation funds, trusts and partnerships. A 10s. in the £1 penalty tax can be imposed on superannuation funds, trusts and partnerships unless they are able to escape such penalty by the various means mentioned in the Bill or unless the Commissioner of Taxation exercises his discretion to exempt them. The Bill deals with far more than taxation and is, in my opinion, in breach of the spirit if not the letter of section 55 of the Constitution, which also states -

Laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only;

The Bill deals with trusts, partnerships and superannuation funds and imposes a penalty tax on them, leaving them an escape route if the Commissioner of Taxation sees fit to exempt them. I believe this is contrary to all principles of taxation. The first principle of taxation is that it must be certain: The taxpayer must be able to know what his tax liability is. How can the trustees of a superannuation fund which has been recognised as a bona fide fund for the last 50 years know its tax liability when this Bill puts that fund under a penalty of 10s. in the £1 unless the Commissioner chooses to exercise his discretion to exempt the fund? I am informed by the association which represents the most reputable funds that practically none of the very large number of superannuation funds that have produced savings and capital resources for the development of Australia can comply with the nine conditions laid down and, therefore, almost all of them will have to rely upon the Commissioner's discretion. How can there be any certainty in that, when the trustees will not know for 12 or 18 months whether their fund is to be liable for the penalty tax? How can the trustees read the mind of the Commissioner of Taxation? 1 have the highest regard for the Commissioner of Taxation and his officers. I have found that the officers of the Taxation Branch exercise their judgment reasonably, but no Bill should place upon the Commissioner of Taxation the responsibility of exercising a discretion whether funds representing £500 million worth of assets should be taxable or not taxable. As I say, the trustees cannot know their liability for probably 12 months or more after the year of income in question. The Bill is contrary to every principle of Liberalism. Liberalism presupposes the right of the individual businessman, and the right of the trustees of a superannuation fund, to carry on according to their own judgment so long as they do not interfere with others or act contrary to the public interest. How wrong it is for a bill to impose a penalty tax on what are clearly bona fide transactions, and then force the funds to use one of the escape clauses or rely upon the Commissioner of Taxation. 1 believe that the trustees of the funds should be allowed ' to manage their own affairs in their own way. In the last few months thousands of letters have been sent out by the Commissioner of Taxation - very polite and helpful letters, and I do not complain about that - virtually telling the trustees of these funds how they are to manage their affairs if they are to escape the penalty tax of 10s. in the £1. That principle is completely obnoxious to me. It is completely obnoxious to every principle that I believe this Government has followed in the past.

The Bill can do irreparable damage to Australia. It will have a most serious effect upon the savings of the community and on the willingness of people to invest their small savings in superannuation funds. The people who will be hit by it will be the small people - the employees and the wage earners - who put their small savings, supplemented by contributions from their employers, into these funds hoping to get some worth while Benefit on their retirement. Now they can find that their funds will be subject to a 10s. in the £1 penalty tax, perhaps because the trustees failed to comply in some respect with requirements. If, for example, an employer fails to make a contribution to the fund - and the employee has no control over that - the fund becomes liable to the penalty tax. I realise that the Commissioner has discretion to waive this liability, but 1 say without fear of contradiction a fund's tax liability should not depend upon the discretion of the Commissioner, however excellent that Commissioner may be.

Of course, one understands why the Australian Labour Party is supporting this measure. This gives a perfect means of socialising and nationalising industry. Why leave the penalty at 10s. in the £1? Why not make the penalty tax 19s. in the £1 and wipe out all private superannuation funds, leaving in existence only government superannuation funds? Why not apply this principle to the Press? The Press might be interested in this. Let us impose a penalty tax of 19s. in the £1 on all newspapers. We will soon discover whether they find it worth while continuing in office when they have to pay 19s. in the £1 tax on their income. Of course, the Bill would provide that they do not have to pay the 19s. in the £1 tax on their income if they publish matter meeting with the approval of the Socialist government. No wonder the Labour Party so strongly supports this Bill. Let us apply this principle to television and radio stations. Let us make them pay 19s. in the £1 tax on their income unless they broadcast material acceptable to the government of the day. It is Labour's policy to nationalise insurance in this country. That policy is in the forefront of Labour's platform. The simple way to give effect to that policy is to impose a penalty tax of 19s. in the £1 on the income of insurance companies, thereby wiping out the private funds and leaving only the government fund to carry on. The next step is banking. It is Labour's policy to nationalise the banks. This is the way to do it. Impose a penalty tax of 19s. in the £1-

Mr Crean - Mr. Speaker, may 1 direct your attention to the fact that this is a Government measure? It was not introduced by the Labour Party with a view to nationalising the banks. I suggest that the honorable member is wandering rather widely.

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