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Thursday, 27 November 1941


Senator SPICER (Victoria) .- I move -

That sub-clause (2.) be left out with a view to insert in lieu thereof the following new sub-clause: - " (2.) The amendments effected by the last preceding sub-section shall not apply to any dividends paid, credited or distributed it the dividends -

(a)   were declared prior to the thirtieth day of October, One thousand nine hundred and forty-one; or

(b)   arc paid out of profits arising from the sale or the compulsory resumption for public purposes of assets not acquired for the purpose of resale at a profit and that sale or resumption, as the case may be, took place prior to the thirtieth day of October, One thousand nine hundred and forty-one."

The purpose of the amendment is to prevent the retrospective operation of the amendments to the Income Tax Assessment Act, which are contained in clause 7. That clause amends section 44 of the Income Tax Assessment Act 1936-1940, and by so doing it removes the previous exemption which existed, whereby the assessable income of a shareholder did not include " (a) dividends received from a company that does not carry on business in, or derive income from, sources in Australia, and (b) dividends paid wholly and exclusively out of one or more of the following ..." One which is now excluded is profits arising from the sale or compulsory resumption for public purposes of assets not acquired for the purpose of resale at a profit. We are dealing with two proposals. We are removing, first, the exemption which applies to dividends derived from sources outside Australia; and, secondly, the exemption that previously attached to dividends paid out of what can properly be described as capital profits. In the House of Representatives the Government accepted the view that it would not be proper to apply the new law to dividends received from sources outside of Australia before the 29th October last, and the bill was amended accordingly. However, the position still remains unsatisfactory in relation to dividends paid out of capital profits.


Senator McBride - Out of the realization of assets.


Senator SPICER - Yes. The assets out of which the dividend is paid may have been realized some considerable time before the 29th October, but it may just happen that the dividend has not been declared. Dividends in such cases should be excluded from this provision. For instance, there may be two companies carrying out a transaction of this kind. One may have sold its assets and made a profit on the sale before the 29th October and declared a dividend out of that profit before that date. That dividend will be exempt under the clause as it now stands. But if another company has realized profits on the sale of capital assets before the 29th October, but happens not to have declared the dividend out of those proceeds, that dividend is taxable. The sole purpose of my amendment is to put those two cases exactly on the same basis, by excluding from the operation of this clause any dividend which is the proceeds of the realization of capital assets where the realization of those assets took place before the 29th October.







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