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Thursday, 9 December 1971
Page: 4454

Mr CREAN (Melbourne Ports) - I must say that 1 concur with my friend, the Treasurer (Mr Snedden), in his view that we are entitled to take the utmost steps that we wish to take with respect to what appears to be an intent to subvert the provisions of the Act by what might be called legal contrivances. The Casuarina case which the Treasurer mentioned is an instance of what I mean. I take the firm view that most people in the community cannot avoid the legal obligation to pay taxation and that those who try to be clever about the inadequacies of the law deserve to be met with the harshest consequences if it is felt that they are subverting the principle of an Act.

Early in his speech, the Minister said:

There will thus be provided a full opportunity for the terms of the Bill to be considered within the Parliament and outside it before the debate takes place.

No opportunity will be provided within the Parliament to debate this matter until we resume in February. I hope that an opportunity will be given early in the next sessional period, before the Bill comes on for debate, lo discuss some of the principles involved. I must say that I am at one with the Treasurer on this issue. Legal gentlemen try to draw very fine distinctions between the evading of taxation and the avoiding of taxation. They become rather sensitive when one term rather than another is used. Candidly, J find it a bit difficult at times to know what is the difference between 'evading' and 'avoiding'. Legally there are some distinctions. 1 hope that we will be given some kind of opportunity to debate this matter and i hope that those people who are affected by matters of this type will make their representations.

I suppose that the proposition that I am about to put is implicit in the whole taxation structure. I take as an example the manufacture of boot polish. If a company is unsuccessful in making boot polish - most boot polish manufacturers in Australia have been quite successful; the Kiwi company is a good example, but my remarks refer to any company that is unsuccessful in prosecuting a particular endeavour - and it has capital resources, that company then can go backwards, if you like, from boot polish manufacture to making boots. On the other hand, if a company is successful in manufacturing tobacco should it be able to move forward into the manufacture of, say, lemonade or wine? These are some of the matters that we have to face up to and this leads me to deal now with loss companies. This is a curious device. It involves firms which, if they were individuals, would be declared bankrupt, but which, because of the provisions of the law, may be bought as loss companies, as they are called, and there is a tax value in such companies to the buyer. Candidly, I would like to remove that kind of opportunity. In my view if one has been unsuccessful in one endeavour that may be a tragedy to him. but his business should not be available as a grab for someone else who is successful in another endeavour. I would like to see these matters contemplated in some detail before the House considers them. The Treasurer and I are at one on these issues. Part of this legislation deals with the ability of a private company to become a public company simply to accept the taxation advantage involved. The law should not allow such an opportunity. I was interested the other night to hear the honourable member for Wentworth (Mr Bury) ask a question about this matter. I suppose there are some disadvantages as well as advantages in dividend stripping, as it is described. But to most people it is an occult science, lt. has overtones of mystery and so on. The Treasurer on occasions has apparently felt that I was hostile, rather than sympathetic, towards him. On this issue 1 am at one with him and I acknowledge the practical difficulties involved when the law takes a certain view. The law tries to set out a code of behaviour. I have often quoted the view of Mr Justice Mansfield of the British courts that an individual is entitled, if he wants to, to drive a coach and horses through the law, but the law is also entitled to block such people. I am on the side of the law in blocking these activities 1 have been speaking about.

One of the difficulties in our system is that the majority of people who are described as taxpayers have no ability whatever to evade their proper and legal responsibilities. But there is the clever group who, by one means or another, within or without the law, or by means of the interpretation of the law, reduce the tax payable by them and this short fall in revenue has to be made up by those who have no legitimate device by which they can reduce their taxes. I and my Party are with the Treasurer on any legitimate attempt to close these loopholes to those who might be described as the shrewd lawyers in the community; alt praise to their professional ability but no praise to their zeal as far as bending the law is concerned.

Debate (on motion by Mr Crean) adjourned.

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