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Thursday, 27 November 1941

Senator KEANE (Victoria) (Minister for Trade and Customs) . - I move -

That the bill be nowread a second time. This bill introduces a new type of taxation. Up to the present a serious gap has existed in the taxation system of this country owing to the absence of a measure such as this. The taxation authorities have to contend with many devices adopted by taxpayers in order to avoid obligations placed upon them by taxation acts. I am not using the word " avoid " in any derogatory manner, but am referring to the legal methods that can be adopted to lighten tax burdens, and of which advantage has been taken in the past by taxpayers. The measures adopted by taxpayers in their efforts to lighten the burden of taxation, are usually directed to spreading their assets nominally amongst the members of their families, and in some cases other persons who act as dummies. The means adopted are usually the creation of settlements or trusts, the formation of family companies, and gifts of assets. Income tax, estate duty, and land tax can all be avoided by such means unless some action be taken to protect the revenue. The extremely heavy weight of taxation that has had to be placed upon the community by the exigencies of the present war will increase this tendency to a dispersal of assets, and this bill is designed to assist to protect the revenue from such dispersals. The bill has two purposes - to protect the revenue, and to produce revenue. The middle course has been adopted rather than either making the bill fully protective by placing such a high duty upon gifts that taxpayers would be deterred from making them at all, or, making the bill fully revenue producing by placing such a low duty upon gifts that it would not seriously deter the making of gifts, and would produce the maximum revenue. The bill is designed to protect the revenue by having some deterrent effect, and at the same time to produce revenue. Similar measures have been adopted in New Zealand and in Queensland, and I understand, are working successfully. The Government's proposals are modelled upon the New Zealand and Queensland legislation., and have closely followed the provisions of those acts. The bill provides that all gifts made within a period of three years shall be taken into account for the purpose of fixing the rate of duty upon any particular gift. If' the aggregate value does not exceed £500 no duty will be payable. Exemption is also provided for small gifts, and gifts to the donor's wife and children and other persons for maintenance and education. Retiring allowances, pensions and gratuities to employees and gifts to religious, scientific and charitable and educational institutions are exempt. Where a gift, which has been subject to duty, forms part of the estate of the deceased person, i.e., the deceased person dies within twelve months of the making of the gift, there will be a rebate of gift duty so as to ensure that the gift is not taxed twice, viz., under this legislation, and under the Estate Duty Act. That act provides for the inclusion in the estate of the deceased, of gifts made within twelve months preceding the date of death of the deceased. Returns will be lodged by donors, and assessments will be issued by the Commissioner of Taxation, who is to have the general administration of the act. Donors will have a right to object to the assessment, and if the objection concerns the value of property comprised in the gift and the donor is dissatisfied with the commissioner's decision on the objection he will have the right to approach the Valuation Board constituted under the Land Tax Assessment Act. The donor will also have the right of reference to a Board of Review on any other questions. A right of appeal to the courts on questions of law is also provided in the bill. The scale of rates to be imposed is that adopted for the purpo. es of estate duty, and commences at 3 per cent, which applies to the aggregate value of all gifts, made within the period of three years, up to £10,000. It progresses steadily thereafter until a maximum of 27.9 per cent, is reached when the aggregate value reaches £500,000. I shall deal more fully with this aspect of the proposal when moving the second reading of the bill imposing rates of duty.

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