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Thursday, 27 November 1941


Senator A J McLACHLAN (SOUTH AUSTRALIA) . - It appears to me that the Minister (Senator Keane) is inconsistent in accepting the first proposal and rejecting the second. An amendment was accepted in the House of Representatives which enabled companies to escape tax in cases in which the distribution took place, or the dividend was declared, prior to the 29th October. Having regard to this legislation, I venture to say that there will be a number of companies declaring dividends and going into liquidation in a variety of ways in order to safeguard the position of their shareholders. However, simply because the dividend has not been declared, and that is a purely formal act, profits derived from the sale of assets before the 29 th October are to be taxed as dividends. The point made by the Minister is that no obligation rests upon com panies to declare such dividends ; but they must be declared soon or later. I do not know whether there will be many of these cases, but 1 appeal to the Minister to accept the amendment as a matter of justice. "We are aware of the experiences of preference shareholders in the past in cases of liquidation where a dividend had not been declared. For many years it was thought that because a dividend had not been declared preference shareholders were not entitled to a dividend on their capital. However, the inequity of that position has since been recognized by the courts, and the dividend, whether it is declared or not, is subject to the same preference as the preference shareholders enjoy in respect of their capital. I do not think that the loss of revenue will be very great if the amendment be accepted. In any case it simply proposes to deal out even-handed justice in such cases as have been outlined by Senator Spicer.We should not make flesh of one and fowl of another.

Question put -

That the words proposed to be left out be left out (Senator Spicer's amendment).







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