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Thursday, 6 December 1973
Page: 4371

Mr Eric Robinson (MCPHERSON, QUEENSLAND) - My question is addressed to the Treasurer. By way of a short preamble, I take it that we all want to see competition maintained within Australian commerce and we therefore want to see small businesses and small companies successful. Does the Treasurer accept that with the private company tax rate moving up to the public company rate private companies, particularly in an inflationary period, will have difficulty in financing normal growth let alone any expansion? Does the Treasurer accept that in all equity private companies should not be treated differently from public companies by being further disadvantaged in having to pay additional taxation unless they distribute at least half their after-tax profits?

Mr CREAN - If the honourable gentleman were serious about competition I suggest that he should have a word with some of his colleagues in another place about the restrictive trade practices legislation. I would indicate to him also the statement made by my colleague, the Minister for Secondary Industry, with regard to setting up a system for assisting small businesses - something that well could have been done years ago and never was. As far as the treatment of private companies is concerned, here again is one of those areas where the honest and the legitimate have been penalised by the sins of the not so scrupulous. The private company law has been one of the most difficult areas and I suppose one of the most fruitful for the unscrupulous for tax evasion and tax avoidance. This Government, as did the previous Government, has endeavoured to close many of those doors. It certainly will make it a lot easier in the future if there be no perpetration of chains of companies where there is not much advantage in being a private company as against a public company. This at least is what we have done by endeavouring to bring ultimately the tax rate for private companies up to the rate for public companies. After all, the only difference between a private company and a public company now will be so far as the number of shareholders is concerned. Private companies, if they wish, can have a greater number of shareholders and become public companies. The sort of logic that underlay the idea that no undistributed profit difficulties exist in relation to the public company was that it was thought that the pressure of shareholders was sufficient to enable a fair distribution to be made. With private companies, because there was a limited number of shareholders who often were closely knit on a family basis, it was easy for the income of a private company to bear less tax than it would have borne if it had been earned by a partnership or by individual activity. I believe that that difficulty still exists as far as the undistributed part of private company profit is concerned.

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