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Tuesday, 17 March 1987
Page: 928

Mr LIONEL BOWEN (Attorney-General)(5.48) —In reply to the honourable member for North Sydney (Mr Spender), I agree with the last part of what he said. Section 25 of the Income Tax Assessment Act attempted to say what the definition of `income' would be. It would be a good starting point to say that everything one receives is income. We could then be much more effective in stipulating what one might be allowed to have by way of deductions, rather than trying to put in specific sections-which now run into hundreds in the present Act-on exceptions that arise. One day we might be able to get a group of lawyers who could do that on a non-party basis.

In fairness to the present Commissioner of Taxation, in case he feels that he has been unfairly considered because of matters that I have mentioned, I think I should say by way of explanation that it is right that 351 cases were referred in 1984-85 and 3,528 cases were referred in 1985-86. The explanation is that the large increase in the referral of matters in 1985-86 follows recognition by the Australian Taxation Office of the failure of its test case approach in relation to paper avoidance matters. A large percentage of the cases referred to the supreme courts in that year were scheme cases only, and only about 10 per cent are likely to proceed to hearing. The rate of referrals in 1986-87 will be much lower and the majority of these cases are what are called non-scheme cases. It is the intention of the Taxation Office to clear the remainder of matters awaiting referral to the courts by 30 June next. On 7 January last there were 4,088 cases awaiting referral to the courts. It is expected that about two-thirds of those cases will be settled within the Tax Office and one-third will actually be referred to the courts.

Having made that explanation, certainly a substantial number of cases could be referred to the courts. The Taxation Office must do this, but it is looking at the matter on the basis that perhaps only 10 per cent of the cases will go to hearing because a number of them relate to what are called scheme cases. If that is so, we will not have the problems that we appear to have because of the numbers that have been referred. But in fairness to the Taxation Commissioner, he is doing his job to get these matters finalised. I think that what we have here is a backlog that is now being dealt with. I hope that the courts will not be delayed too much. Additional resources will still be needed. Having said that, it shows the need for the court structures to be effective and efficient. Some cases involving people who are disputing taxation matters have been going on for years. The backlog of these cases, as well as those coming from the Taxation Boards of Review, clearly show that the system has not been working, for many reasons, not least of which, as the honourable gentleman has again referred to, are the complexity and the difficulty of understanding the Act.