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Tuesday, 9 October 1984
Page: 1445

Senator JACK EVANS —My question is addressed to the Minister representing the Treasurer. Following the ruling of the Federal Court of Australia last Friday week which overturned an interpretation by the Commissioner of Taxation that retread tyres should be taxed at the new tyres rate, will this decision be appealed to a higher court? As the Government has consistently refused to legislate to clarify this anomaly, which puts all repaired items in jeopardy of having a sales tax imposed on them, will it now end this farce and legislate this week to distinguish between new goods and repaired items such as tyre retreads? Finally, will the Government guarantee that at the very least it will immediately refund the sales taxes imposed on tyre retreaders and alleviate the unfair disadvantage imposed by a tax commissioner's wrong interpretation of the law on this group of small businesses?

Senator WALSH —I do have a note on this matter from the Treasurer-it originated in the Australian Taxation Office-but I have had it for a few days and it may not be up to date. I preface my answer by asking Senator Evans to bear that in mind. The Commissioner has told the Treasurer, who has told me, that on 28 September, before Justice Beaumont, an action was brought by Jax Tyres Pty Ltd that the operation of retreading tyres does not involve manufacture and that the retreaded tyres in question are not liable to sales tax in the manner contended by the Commissioner, and the court-the honourable senator should bear in mind that this information is a few days old and could be superseded-has not yet delivered a final order on the matter. The Commissioner has stated that in due course he will appeal against the decision and seek a stay in the proceedings. The Commissioner has further informed the Treasurer that he is issuing a tax ruling to this effect which will also advise taxpayers that they will continue to be liable for payment of sales tax pending the outcome of the appeal. As I said, that information was given to me last week and may have been overtaken by events. I will refer it to the Treasurer to see whether there is anything additional to report.

Senator JACK EVANS —Mr President, I ask a supplementary question. The Commissioner of Taxation has subsequently issued a ruling, No. FT2087, which directs his officers to continue to impose this tax. I put it to the Minister: If the Commissioner's appeal to the High Court of Australia also fails, will this necessitate the Government legislating retrospectively to ensure that the Commissioner's high handed action is made legal?

The PRESIDENT —I do not know whether the question is hypothetical, but I will pass it on to the Minister.

Senator WALSH —Yes, it is rather hypothetical. I am not sure whether it seeks legal opinion, which I am certainly not qualified to give. I suppose it is safer for a layman to give legal opinions than it is for a lawyer to do so; a layman's reputation is not at stake. I would think that in the hypothetical situation that Senator Evans outlined-that is, the situation in which the High Court upheld an appeal that the Commissioner had not correctly interpreted the Act-the Commissioner would be obliged to refund the sales tax which had been levied. I will have the matter clarified by the Treasurer.