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Tax priority to be removed



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TREASURER

PRESS RELEASENO.

JOINT STATEMENT BY THE TREASURER, THE HON JOHN DAWKINS MP, AND THE ATTORNEY-GENERAL, THE HON MICHAEL DUFFY MP

TAX PRIORITY TO BE REMOVED

The Treasurer, the Hon John Dawkins MP, and the Attorney-General, the Hon Michael Duffy MP, today announced that the Australian Taxation Office's (ATO's) priority on an insolvency is to be abolished.

At the moment, the ATO has priority over employees and other unsecured creditors in respect of unremitted group tax deductions and certain other payments. This priority is in recognition of the particular nature of the amounts deducted from funds due to payees and required to be remitted to the Commissioner of Taxation.

The Ministers said that "unfortunately, the priority can have the effect that there is often little or nothing left for employees and other creditors after payment of outstanding taxes. As the priority only operates when a business is put into some form of insolvency administration, the priority puts no pressure on companies to remit taxes". The Ministers

said "the best and fair approach to solvency difficulties is to identify problems early and take action to stop losses from escalating. There are a range of reforms in the proposed Corporate Law Reform Bill which are designed to encourage early action of this nature, and the tax law will be amended to provide the ATO with new procedures which will enable it to recover unremitted PAYE deductions and similar amounts more quickly and to encourage the directors of the business to face emerging problems as soon as possible".

The legislative amendments envisaged will, for example, address the current situations where the Commissioner is not able to take action to recover unremitted PAYE deductions because the precise amount of those deductions is not known. The amendments foreshadowed will allow the Commissioner to make an estimate of amounts not remitted

and commence recovery action on the basis of that estimate.

The Ministers said, "One of the other themes in the Corporate Law Reform Bill is to provide additional options to help businesses that are encountering solvency difficulties, particularly through the proposed voluntary administration procedure. The removal of the

priority will make that procedure much easier to use, and this in turn will help directors of companies to deal with solvency difficulties in a positive and constructive way."

The necessary amendments to the income tax legislation and the Corporations Law will be introduced into Parliament at the earliest opportunity. The change will apply to unremitted amounts which become payable on or after 1 July 1993.

2 December 1992

COMMONWEALTH

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1 * 1 AUSTRALIA* | I Λ Q Q

FINANCIAL REVIEW I S " U ~ 7 <* SYDNEY

For R E FE R E N C E ONLY Original must NO T be removed from Library

TPC attacked again as/i new Act goes through | THE Trade Practices Com­ mission. the country’s compe­

tition regulator, has become “doctrinaire and overly intru­ sive” under its new head, Professor Allai^ Pels, accord­ ing to a key business organisa­ tion.

The TPC was stacked with regulators and academics, the Australian Chamber of Com-rrie.rre ailt'l llllllKrry .saifTyes-terday, and lacked people with business and legal expe­ rience.

The attack on the commis­ sion occurred on the day the TPC’s campaign for a tougher com petition law' climaxed with the passage through Parliament of a very substan­ tial revamp of the Trade

Practices Act. Those regulatory changes will make it tougher for big : business to expand through

mergers and takeovers, and I corporations will face penal­ ties of up to $10 million for abuses of market power.

They also will enhance the ability of small businesses to sue larger com panies for “unconscionable conduct”.

Professor Pels played a key political role in convincing backbenchers, and then the Government, of the need for legislative changes that are intended to sharpen competi­ tion among Australian com­

panies. Business organisations, such as the ACCI, stridently opposed him through each step of the political process.

The TPC needed to get business “on side”, an execu­ tive director of the Australian Chamber of Commerce and

Industry, Mr John Martin, said yesterday. 1

“With business confidence at a premium it is most

important that perceptions of the competition watchdog, by

large and small business alike,

the current composition ol the TPC. .

“The full time and associ­ ate'membership of the com­ m ission continues to pe

dominated by people ^

experience as regulators and academ ics and lacks real commercial legal expertise , and people .with ‘hands, on

experience in business, 1 said. _ . „„

| Under Professor Pels an

I economist from Monash Uni­ versity, the-TPC has adopted

! ssrsisss. j law yers, a legal outlook

I tended to dommate.

I The chamber also accused the TPC head of winding down the level of regular consultation with business that occurred under previous

chairmen. The few remaining meetings had been turned into “a tool for Fels to give notice : of what he is doing,” Mr

! Martin said. The A C C I used the

appointm ent o f M r John

Broome, a senior bureaucrat i from A ttorney-G eneral, as j the TPC’s new deputy as a platform for its criticisms and

, a chance to press for greater business consultation. Mr Broome, who is per­ ceived by the ACCI as a

“ b a l a n c i n g i n f l u e n c e " ,

replaces former academic and ^ economic bureaucrat, Profes ' sor Brian Johns.