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Wednesday, 3 June 1942

Senator McLEAY (South AustraliaLeader of the Opposition) -I support the proposed new clause. Under . the New South Wales, act passed last year, any company deriving profits in that State, and paying a dividend wholly or partly from those profits, is required to deduct from the dividend tax on the New South Wales portion of the dividend at the rate of1s. in the £1 for individuals and 3s. 6d. in the £1 for companies. Such tax is then paid by the company to the Commissioner. The effect of this provision is that certain dividends received by shareholders during the year ended the 30th June, 1942. have already borne some New South Wales State income tax, and since the uniform proposals would tax this income at the new combined rate, it would amount to double taxation. The whole cause of the trouble is the action of New South Wales in taxing the dividends as they are paid instead of following the normal course of taxing in the following year. In view of the fact that an assessment bill will be brought down with the budget in August, I mention this matter in the hope that the Minister and his technical advisers will consider it.

Senator Keane - It will be examined.

New clause agreed to.

Clauses 19 and 20 agreed to.

Clause 21 -

Section one hundred and twenty-five of the principal act is amended by omitting from sub-section (1.) all the words after the word " Parliament " and inserting in their stead the following words and proviso: - " income tax upon that interest :

Provided that this sub-section shall not apply where the person to whom the interest is paid or credited is not a company and the interest so paid or credited during the year of income does not exceed One hundred and fifty-six pounds.".

Section proposed to be amended -125. - (1.) Where interest is paid or credited by a company lo any person who is a non-resident -

(a)   on money secured by debentures of the company and used in Australia, or used in acquiring assets for use or disposal in Australia; or

(b)   on money lodged at interest in Australia with the company, the company shall be liable, without affecting its liability (if any) in respect of other income tax payable by it, to pay at the rate declared by the Parliament -

(   i ) where the person to whom the interest is paid or credited is a company - income tax upon that interest; and

(ii)   where the person to whom the interest is paid or credited is not a company - income tax upon so much of that interest paid or credited in the year of income as exceeds Two hundred pounds.

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