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Wednesday, 10 May 1972
Page: 1524

Senator NEGUS (Western Australia) - I wish to thank the Leader of the Government in the Senate (Senator Sir Kenneth Anderson) and the Leader of the Opposition in the Senate (Senator Murphy) for giving me the opportunity to speak at this time. I wish to relate briefly to honourable senators the history of death taxes in this country. The last time that any change of consequence occurred in this area was in December 1941 when the level to which exemption from estate taxes would apply was set at $20,000. Many years have passed since that level of exemption was set but this Parliament has not acted to raise it. In 1941 I purchased my home and the land on which it stands for £875, or $1,750 in decimal currency. At that time exemption from death taxes was granted to estates up to a value of $20,000. Today the value of my home has increased approximately 9 times to $18,000. Today people must pay death taxes on estates exceeding the level of exemption set in 1941, without any allowance at all being made for the effects of inflation in the interim. As a result the people of Australia are put to great trouble and in some cases humiliation.

I ask that the Senate do all in its power to raise the level of exemption from federal death taxes. After all, we have been elected to look after the interests of the Australian people. Not only should we act to improve the situation in the field of death taxes but perhaps we should also apologise to the people for not having acted on it before. Many thousands of people have been hurt because the level of exemption from death taxes has remained at so low a level for so long. It is a shameful thing.

Senator Gair - You did not discover that. The Democratic Labor Party proposed an amendment to the legislation years before we heard of you.

Senator NEGUS - I realise that the DLP moved an amendment a long time ago, but I have been here since last August and in that time I have been the only senator to speak on death taxes.

Senator Gair - How frequently have you spoken on it?

Senator NEGUS - If Senator Gair would like to get up and speak on this subject I will give him a quiet hearing. A Senate Standing Committee which was appointed by this House is looking into the payment of death taxes. I sincerely trust that when its report is presented to the Senate we will do our utmost to ensure that its recommendations are adopted and action is taken by the other House, where any changes must be initiated. It is obvious to me and to anybody else who has looked into this question as deeply as I have that special provisions should be made in respect of death taxes for a husband and wife who have lived as partners. Death taxes should not be payable by a surviving partner. It is obvious to any normal, sensible person that a husband and wife are partners.

On a recent visit to Canada and the United States of America I discovered - perhaps many honourable senators know already - that in the United States, of America the level of exemption from estate taxes on an estate which was shared by a husband and wife is set at $100,000. On estates valued at more than that amount tax is payable on the balance at the rate of only 1 per cent. In addition, half of the personal estate of a deceased husband passes tax free to his widow. In Australia the level of exemption from death taxes is set at $20,000 federally and ranges from $12,000 to $30,000 in the States. However, even that part of the estate which is exempt from death taxes cannot be obtained by the beneficiary for quite some time. It is necessary to wait until the authorities will release it. This is a shameful practice which causes humiliation and distress to people at a time of bereavement. It is a known fact, not only to honourable senators I am sure but to everyone, that an estate is frozen on death. Very little of that estate can. be used by the surviving spouse unless it is released by the department concerned. . The valuations of properties, and shares are taken as at the date of death. That is a ridiculous situation.

I know of a woman in Western Australia whose husband died and left her an estate which on paper has been submitted at $2. 4m. In distress that widow rang me. She had applied for a social services pension and her application had been granted. She is receiving the pension, although her husband was a millionaire. X asked her to bring her papers to me and I have them with me now. I am prepared to table them if that is the wish of the Senate. They are here and available. I have the widow's permission to table them in the Senate. In that estate were 21,000 odd. Poseidon shares which at the date of the husband's death were valued at $90 a share. On the day the widow came to see me they were valued at $13.20 a share. But the Government insists that death taxes be paid on the valuation as at the date of death. The widow, to use her own words, said: T will be $500,000 in debt if I have to pay the death taxes and the other beneficiaries in my husband's will'. It is a ridiculous situation. I looked into the matter very carefully. I perused the paper on the day that she came to see me and I decreased the estate to about $666,000 in actual value. Her husband had been dead only about 12 months.

Senator Sim - At what stage should estates be valued?

Senator NEGUS - Governments- State and Federal - value a person's estate as at the date of death, and the taxes are charged on that valuation. I feel that the governments should assess the death taxes at that time at a certain amount so that the beneficiaries can endeavour to raise those taxes. The death taxes should be adjusted to the value of the estate on the date on which the departments submit the account, for payment.

Senator Wheeldon - What happens if the normal value of the estate increases between the date of death and that date? That makes it worse still, does it not?

Senator NEGUS - If the value of the estate increases the estate will not suffer at all.

Senator Sim - It will.

Senator NEGUS - It will not. 1 think the executors can decide that matter and it should be left to them. For the information of the honourable senator, the governments - both Federal and Stale - have the right to increase death taxes, even if they have been paid, if the person obtains a higher valuation than the Department put on the properties or the shares. I have written to departments and asked them what would happen if a person could not obtain the amount at which the departments had valued the shares or the property. I was told that the person could always apply for a revaluation. I asked whether that person would get a revaluation and receive a refund and the answer was: 'No comment'. I have not heard of a case in which anyone has received a refund of death taxes after they have been paid. I feel that the valuing of property or shares as at the date of death is a very unfair method of valuing an estate.

Senator Sim - At what stage should it be valued?

Senator NEGUS - It should be valued at the date of death so that the approximate amount of death taxes would be known, but only on the issue of the account by the department should the value be put. As honourable senators will know, it can take up to 6 years before an account can be issued, because of court cases. The finalisation of an estate can take a long time and things can change. It is impossible for a person to raise the amount of death taxes which the governments of the day put on a deceased's property.

I feel very sincerely about the matter. It is most important that the Senate consider releasing a husband and wife, for their life time, from having to pay death taxes. I think too that dependent children should be released from having to pay death taxes on an estate. I feel that people outside those categories would not object to paying death taxes, although I know, from correspondence with many people, that sisters and brothers, dependent sons or daughters, or non-dependent sons or daughters have made it their life's work to help the father and mother build up a property knowing that on the death of the father and mother, or either, the property will be left to them and they will be reimbursed for their work. Recently while travelling on an aircraft from Queensland I met a friend and colleague of Senator Gair's. That man will provide me with information which he considers will open everyone's eyes. He has been appointed to rather important positions on various committees. He told me of a father and mother who incorporated a company in which their 2 sons were shareholders. The 2 sons have lost everything through having to pay death taxes.

I am afraid that there will be rather a surprise coming for members of the Opposition - it may have come already - who, I believe, have been opposed to abolishing or altering death taxes because they feel that the taxes hit only the rich. Recent advice and information presented to the Senate Standing Committee on Finance and Government Operations proved that in many instances what has been called tax avoidance has been practised very successfully. Large estates are avoiding taxes. If the Commonwealth Government will not take action in the Senate or in the other place I will request the Government to issue a booklet telling all Australians, not just those who can afford to pay, how to practise tax avoidance. If everybody practised tax avoidance we would not have death taxes because no-one would retain large amounts. If it is good enough for tax avoidance to be legal for those who can afford to carry it out, it is good enough for everyone to be able to practise tax avoidance.

We should be ashamed that we have had death taxes in Australia, without alteration, for so many years. I know that at times we get snowed under with work, but that is no reason why this Government or any government - there have been a number of governments in power since 1941 - should have allowed the non-taxable amount to remain al the same figure from 1941 to 1972 - 31 years without change. It is shameful to think that this has continued. I feel that the move to give the States the opportunity to lift the amount below which death duties are not payable to a reasonable and just figure must come from the Federal Government. If necessary - and possibly it will be most necessary - the Commonwealth must reimburse the States for the revenue that they will lose by lifting that level.

I have with me now some figures which have been checked by the Research Service of the Parliamentary Library. I am advised that, if the value of an estate below which no duty is levied was increased to $50,000, the cost would be only $33.4m per year.

Senator Sim - To whom?

Senator NEGUS - That figure of $33.4m covers both Commonwealth and State duties. If the level were lifted to a more equitable figure of $100,000, we could probably double that figure to give a total cost of $66m or $67m. If the level were lifted to $50,000 and the Federal Government were to reimburse the States so that they would not lose the revenue that they require, all the Commonwealth Government would need to find would be $33.4m at this time.

It is necessary for us to give urgent attention to this matter. If honourable senators look at the newspapers they will know that every day that goes by people die. This means that other people will be affected by these death taxes. 1 said a little while ago that perhaps the Opposition was against my proposal because it did nol think that these duties affected the small people. But I have information from people all over Australia which shows that these death duties seriously affect them. That this situation continues is shameful.

The administration of death duties being what it is today, with the freezing of the assets of estates, insurance companies do not even pay out insurance. A widow who thought that she might have her husband's insurance to live on finds that she is in trouble. One widow from whom I received a letter yesterday said that she had a home worth $15,000 or $16,000 and, additionally. $4,000 in cash. That was all she had left to her. As a result of death duties, both Federal and State, and solicitors' fees, etc., the $4,000 has been reduced to $2,000 and she has applied for a social services pension. It is ridiculous to think that on one hand we, take a bulk sum from these people and, on the other hand, give them back so much per week in social service payments. Once again, I thank the Leader of the Government and the Leader of the Opposition - perhaps thanks are due also to the Leader of the Australian Democratic Labor Party, Senator Gair - for the opportunity to raise this matter. I feel that 1 have spoken long enough. I sincerely hope that the Senate will work on this matter as an urgent one.

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