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Wednesday, 17 December 1941

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

That the bill be now read a second time.

This bill is necessary for the purpose of providing for a war tax income, upon which the war tax introduced to the Senate in another bill will be levied. The bill introduces a new part to the principal act - Part IIIb - War Tax - which provides the method of ascertaining war tax income. The tax will be imposed upon actual income ascertained before allowing the statutory exemption and certain deductions of a concessional nature, including State income tax. A short statement of the deductions that are not to be allowed has already been given in my speech upon the bill imposing the rates of war tax, but a deduction will be allowed for Commonwealth income tax. The Government recognizes that to-day Commonwealth income tax absorbs so much of the income of the individual that the liability for war tax should be determined only after taking into account the Commonwealth tax that is payable on that income. If the income thus ascertained does not exceed £156 - or £200 in the case of a member of the Defence Forces - there will be no liability for war tax. If the income exceeds the' amounts stated, tax is levied upon the total income. In those cases where the income exceeds £156 only by a small amount, there is a saving provision in the taxing Act that the tax shall not be greater than one half of the income in excess of £156, or £200, as the case may be.

The basis of the liability is assessable income for ordinary income tax purposes. Income which is exempt for ordinary income tax purposes is also exempt for war tax purposes. Among the concessional deductions which it is not proposed to allow in ascertaining war tax income is the deduction for dependants which is allowed under the Income Tax Assessment Act. However, the bill recognizes that a taxpayer is entitled to a concession in this connexion and provides, in lieu thereof, for an annual rebate of tax amounting to £2 12s. for each dependant. This fixed amount applies to all taxpayers irrespective of the amount of income. The dependants in respect of whom the rebate will be allowed consist of wife, dependent mother, and all dependent children under the age of sixteen years. As the tax will be in operation for only one-half of the present financial year, one-half only of this rebate will be allowable.

I have already referred to the fact that in the case of members of the Forces, the liability for tax does not commence until the pay of the member exceeds ?200 per annum. In arriving at this amount the Government does not propose to include the allowances paid to the wife for herself and dependent children, but it will, of course, include any allotment of pay made to those dependants by the member himself.

Question resolved in the affirmative.

Bill read a second time and passed through its remaining stages without amendment or debate.

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