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Wednesday, 11 November 1964


Senator WRIGHT (Tasmania) .- I move -

After clause 43, insert the following new clause - " 43a. After section two hundred of the Principal Act the following section is inserted: - " 200a. - (1.) Any person aggrieved by a decision or determination of the Commissioner or a Board of Review in purported exercise of any discretion conferred upon him or it by the amendments to' -this Act made by the Income Tax and Social Services Contribution Assessment Act (No. 3) 1964 shall be entitled to appeal therefrom to the Supreme Court of a State or to the High Court or the Commonwealth Industrial Court. " (2.) The Court shall determine whether such discretion has been exercised on any ground other that the criterion whether the relevant transaction was entered into with the intent to evade income tax and if so may declare the decision or determination of the Commissioner or Board invalid."

Ever since this bill was introduced into the Parliament it has been obvious to every section of private and public life that it is proposed to extend the discretion of the Commissioner of Taxation so that he may decide whether a participating proprietary company should be given the full rebate of 100 per cent, on dividends to avoid undistributed profits tax, or whether it should be entitled to a rebate of only SO per cent. He has been given the discretion to say whether or not trusts involving the accumulation of income are reasonable. No more certain criterion has been laid down for the lawful exercise of his authority. I refer in this respect to the proposed new section 99a, sub-section (2.), which states that the trust provision requiring the payment of 10s. in the £1 tax on income shall not apply to any trust estate if the Commissioner is of the opinion that it would be unreasonable that this section should apply. Also, in relation to partnerships, there is a provision in the Act which states that if there is a partnership where one of the partners has not a real and effective control of his income, the share of the income attributable to that partner is taxed at 10s. in the £1 unless the Commissioner of Taxation thinks that it is unreasonable.

I have said sufficient to show that it is committed to the discretion of the Commissioner of Taxation to judge the reasonableness of the payment of company dividends; to judge the reasonableness of the creation of family or other trusts; and to judge the reasonableness of the creation of a partnership where one partner does not possess the effective and real control of his income. The whole community is concerned at the idea of the administrative enthronement of officials to decide people's rights. The Commissioner of Taxation has a discretion to impose a tax of 10s. in the £1 if he thinks the position is unreasonable, although the rate of tax as the moment may be only about 9d. in the £1.

Everybody is concerned when an official has the right to decide whether or not these things, are reasonable. The Commissioner of Taxation has discretion to control people's rights far beyond the ambit of most of the provisions of the income tax law as we know it. His discretion has been so advanced that I am sure that if we were to seek the judgment of the ordinary people who think they should live under the rule of law, we would find that they condemned it out of hand.

The Commissioner of Taxation has an overriding responsibility to garner for the Treasury the revenue which the Government needs in order to function year by year. He has an inescapable duty in that respect. Therefore, he is the most unfitted person to exercise an impartial discretion as to whether transactions which arc made without intent to evade taxation, but which certainly reduce the revenue yield, are unreasonable. It is true that there is ah appeal to an administrative board which usually consists of a lawyer, a member who is a former official of the Taxation Branch, and a member who is a chartered accountant. It is completely abhorrent to my ideas of nurturing family independence that my arrangements as to partnerships with my sons, by provisions of trust income for my dependants, and the arrangement of the dividends of my private companies, should be supervised as to their reasonableness and propriety, not by a truly independent official, but by the Commissioner of Taxation. People who maintain the idea that we are to be governed by law and not by men, and that our liberty is to be protected by the rule of law, contend that the final decision as to whether we are on one side of the law or the other should be made by a court whose independence is completely guaranteed by the Constitution. The rule of law is now being eroded and undermined and is to have substituted for it the administrative discretion of an official, and on appeal from him, the decision of an administrative board. Except on a question of law there can bc no appeal now to a court of law from the decision of the Commissioner in the exercise of his discretion, of from the decision of a Board of Review reviewing that discretion.

My purpose in propounding this amendment to the Senate tonight is to ask it to accept the principle that there should be an ultimate appeal to a court in a case where a person is aggrieved by the exercise of the discretion appeals. The court of law should be required to say whether or not the discretion of the Commissioner or of the Board has been exercised on any criterion other than whether the transaction has been entered into with an intention to evade the tax. If the Senate is prepared to adopt that as the criterion for the Commissioner exercising his discretion, adversely or favorably, and to give the ultimate right of decision to a court that is all this amendment seeks. It is for those reasons that I have moved this amendment.







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