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Wednesday, 20 May 1936

Senator A J McLACHLAN (SOUTH AUSTRALIA) (Postmaster-General) . - Yes. This provision may appear likely to operate harshly in respect of certain individuals, but we must work on the basis of the conversion of all profits made overseas by Australian residents if we are to be enabled to tax any income derived outside the Commonwealth by Australian residents. Whether the money is, or is not, brought to Australia is the good fortune, or misfortune of the taxpayer as the case may be. The economics of income taxation must be based upon the value of our currency; otherwise no finality would be reached and administration would become most difficult. I shall cite one or two instances on this point. Supposing a taxpayer derives income overseas during the financial year about to close. If the present rate of exchange of £25 is maintained to the 30th June next the taxpayer, for the purposes of furnishing his return, will have to convert his overseas income into Australian currency at that rate for the purpose of furnishing his return of income. If he has not converted it into good Australian pounds, that is his misfortune. It is a matter of good or evil fortune according to whether the rate of exchange fluctuates or remains static. The assessment must be based on the Australian pound. There has been a good deal of discussion regarding the decision of the High Court. Although the matter has now gone to the Privy Council, the taxpayer concerned will not suffer any injustice, because whatever the final decision the legislation will not be made retrospective. The clause as originally drafted was altered in the House of Representatives to its present form. The omission of any reference to telegraphic transfer rates for calculating exchange is due to a decision to allow the common commercial practice applicable to the circumstances of a particular taxpayer to operate. I admit that the subject is full of complexities, and that from time to time difficult cases have arisen, but that is the basic principle underlying the clause.

Clause agreed to.

Clauses 21 and 22 agreed to.

Clause 23.

The following income shall be exempt from income tax -

(c)   Income derived -

(vi)   By any person visiting Australia, from a.n occupation carried on by him while in Australia...... (q), Income derived by a resident from sources out of Australia where that income is not exempt from income tax in the country where it is derived, or where the taxpayer is liable to pay royalty or export duty in any country in respect of goods from the sale of which the income is derived;

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