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Monday, 13 September 1971
Page: 1160


Mr PEACOCK (Kooyong) (Minister for the Army and Minister assisting the Treasurer) - I move:

That the Bill be now read a second time.

The purpose of this Bill is to declare the rates of income tax for the current financial year 1971-72: Apart from the changes foreshadowed in the Budget Speech the Bill is to the same practical effect as the comparable legislation for the 1970-71 year. One change of a purely drafting nature is that, in contrast with past practice, the Bill covers both the ordinary rates of tax and the special rates that apply for the purposes of legislation enacted in 1964 to counter legal tax avoidance. The general rates of tax payable by individuals for the current financial year will, under the Bill, be the same as those imposed for the 1970-71 financial year. It is, however, proposed to increase the additional levy payable by individuals from 2i per cent to 5 per cent of the tax calculated in accordance with the general rates. This change will be taken into account in tax instalment deductions to be made from salaries and wages on and after 1st October next as well as in provisional tax payable in respect of the current year of income.

The upper limits of the age allowance shading-in' ranges are to be raised as a consequence of the increase in the levy on tax at general rates. Apart from this, no changes to the age allowance provisions are proposed. As in the past, the additional levy will not be added to tax calculated under 'shading-in' provisions of the age allowance. The age allowance provisions proposed for 1971-72 will give quite substantial taxation relief to aged persons. An aged person - that is, a resident of Australia aged 65 or more, if a. man, and 60 or more, if a woman - will pay no tax for the current year if his or her own taxable income does not exceed $1,326, and may pay reduced tax if the taxable income is more than $1,326 but not more than $2,286. The equivalent upper limit for 1970-71 was $2,273. A married aged person will pay no tax if the combined taxable income of husband and wife does not exceed $2,314 and there may be reductions in tax if the combined taxable income is more than $2,314 but not more than $4,155. The corresponding upper limit for 1970-71 was $4,102.

It is proposed to increase the rates of tax payable by companies for the 1971-72 financial year by 5c in the $1 on the first $10,000 of taxable income. Friendly society dispensaries will continue to be taxed at a flat rate of 37.5 per cent on the whole of their taxable income. For other companies, the existing differential between the rate on the first $10,000 of taxable income and that on the remainder of the taxable income is 5 per cent in some cases and 10 per cent in others. The proposed charge will eliminate the rate differential for some companies and reduce it to 5 per cent in others-

Apart from raising needed additional revenue, the increase in rates on the first $10,000 of taxable income is directed against the taxation encouragement there has been in the past for taxpayers to arrange their affairs so that, instead of income being derived by a sole company, it is derived by 2 or more companies each of which is taxed at a lower rate on the first $10,000 of its taxable income. Details of the proposed rates of company tax for the 1971-72 financial year- that is, the 1970-71 income year of companies - are set out in a table which, with the concurrence pf honourable members, I incorporate in Hansard.

 

It will be seen from the table that public companies will be taxed at the rate of 47.5 per cent on the whole of their taxable income, other than income taxed at special rates. For private companies the rate on the first ยง10,000 of taxable income will be 37.5 per cent and the rate on the balance will remain at 42.5 per cent. The rate of additional tax payable by private companies which have not distributed sufficient profits as dividends wm remain at 50 per cent.

In keeping with the increase in the rates of tax payable by mutual life assurance companies and ' other life assurance companies in respect of mutual income, and consistent with past practice, the rates of tax payable on the first $10,000 of the investment income of a superannuation fund that does not invest a sufficient proportion of its assets in public securities is being increased by 5c in the $1. This change will apply in respect of the 1971- 72 income year of funds affected.

Technical features of the bill are dealt with in an explanatory memorandum that is to be circulated to honourable members. I commend the Bill to the House.

Debate (on motion by Mr Crean) adjourned.







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