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Wednesday, 11 November 1964


Senator McKENNA (Tasmania) (Leader of the Opposition) . - I was rather intrigued by sub-section (8.) of proposed section 46. Here we are dealing with rebates of taxation on dividends paid by one private company to another private company. The sub-section reads -

A shareholder in a company that is a co-operative company within the meaning of Division 9 of this Part is not entitled to a rebate in its assessment in respect of dividends paid to it by that company.

I read that provision many times without understanding it until 1 came to the explanation offered in the explanatory memorandum that has been circulated. I realise that the draftsman, who had a terrific task to perform, just lifted this provision out of the existing Act and, with scarcely a change of wording, inserted it here. Any honorable senator who has before him the clause we are considering will see how the difficulty arises. In the passage which reads "A shareholder in a company that is a co-operative company within the meaning of Division 9 of this Part " the words " that is a co-operative company " apply not to the word " company " which precedes them but to the word " shareholder ". When one understands that, the reference to the shareholder in the phrase' " its assessment " falls into place. I suggest that when the legislation is next being examined, this provision might well be redrafted to read -

A co-operative company within the meaning of Division 9 of this Part which is a shareholder in a company is not entitled to a rebate in its assessment in respect of dividends paid to it by that company.

I leave the matter on record here. 1 am sure that that was the intention behind the provision. I may have understood it on the first reading instead of on about the tenth reading if it had been couched in those terms. I express my indebtedness to the explanatory memorandum for what it did to help me.

While I am on my feet, Mr. Temporary Chairman, I hope you will permit me to make a brief comment on the general application of this clause, lt has been submitted to me that a great deal of uncertainty and uneasiness would be removed if taxpayers believed that they could submit proposed transactions to the Commissioner of . Taxation before concluding them. 1 realise that this might make the Commissioner of Taxation a general adviser to business in these matters. However, I believe that the Commissioner has been disposed to look at transactions and to indicate whether a particular course of action would be right or wrong. Can the Minister say anything on this subject that will be helpful? Is that the practice of the Commissioner? If so, is it proposed that the practice should be continued? A person might say: " I would like to enter into this transaction, but first I would like to submit it to the Commissioner to see how he views it. If his views are unfavourable, I shall not proceed. If he says that the proposal is acceptable, I shall go on with it." I ask: Is that kind of service available to the taxpayer?







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