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Thursday, 13 February 2003
Page: 11838

Mr McMULLAN (2:43 PM) —My question is to the Treasurer. Can the Treasurer confirm that the $33 million golden handshake to the former chief executive of Colonial First State Funds Management is fully tax deductible to the Commonwealth Bank? Doesn't this mean that Australian taxpayers are effectively paying almost $10 million of this excessive payment? Will the Treasurer ensure that taxpayers do not continue to subsidise these excessive golden handshakes to chief executives?

Mr COSTELLO (Treasurer) —I welcome the question from the member for Fraser, and I look forward to a question on the economy shortly. I have said already today, and I will say it again: I find it impossible to believe that an executive is worth $32 million. That $32 million belongs to the shareholders of the Commonwealth Bank. And it is the shareholders of the Commonwealth Bank who have the ability, through their influence on directors, to ensure that they receive value for the moneys that they have invested in that company. I would urge those shareholders to look very carefully and to demand an explanation from the directors of that company as to what was actually entered into. From what I have read in the newspaper, the payment is fully taxable—that is, that it will be fully taxed and the tax to be paid will be in the hands of the person who received the payment. In relation to a company, the situation is, and always has been, that a company is taxed on its profit. Profit is income less expenses. The Commonwealth Bank is taxed on its profit in full, and the person who received in their hands the $32 million payment, if it is remuneration, is taxed in full. That is the way in which the tax system operates and always has operated in this country. As for the matter of whether or not the amount is something that the shareholders are receiving value for, I find it hard to believe. We have disclosure rules which require this to be disclosed to shareholders so that shareholders can make their views known to the directors who are elected by them and who are accountable for their decisions. As I have said earlier today, I would thoroughly recommend to those shareholders that they take up all of the options that are available to them.