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Thursday, 9 December 1976

Mr Wentworth asked the Treasurer, upon notice:

What are the detailed calculations which lead up to the figure of $9.87m mentioned in line 3, page 1 17, of 1976-77 Budget Paper No. 1.

Mr Lynch - The answer to the honourable member's question is as follows:

An estimate was made of gross PA YE revenue that would have been collected in respect of 1975-76 earnings if the rates of tax instalments that applied from 1 January 1976 had operated throughout the whole of the 1975-76 financial year. The 1975-76 collections, adjusted to an earnings basis (Le. to allow for the lag between instalments being deducted from earnings and remitted to the Taxation Office), were estimated at $8,058.0m.

The base figure was then increased in line with the assumed increases in average earnings (12 per cent) and employment (1.3 per cent to 1976-77 and the additional mere ase in yield consistent with the continued use of tax instalment schedules that reflected 1973-76 rates of tax. A further adjustment was made to convert this result from a month-of-earnings to a month-of-collections basis, and the resulting gross collections, estimated at $ 10,230.0m, were reduced by the estimated effect in 1976-77 ofthe measures affecting gross PA YE collections that were announced in May.

These adjustments involved the cost of indexation and the additional increase in the rebates for spouses and sole parents, estimated at $1,01 lm, the yield from the health insurance levy ($208) and the gain from the withdrawal of income tax rebates in respect of dependent children and students ($428m).

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