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Wednesday, 26 November 1941

Mr CHIFLEY (Macquarie) (Treasurer) . - I ask leave of the House to have the report of the special committee of members incorporated in Mansard, for record purposes. [Leave granted.] The report is as follows: - 26th November, 1941.


We, the signatories to this letter, being the members of the committee appointed to inquire into the proposal to impose a duty upon gifts, beg to report that we have examined the Gift Duty Assessment Bill that was printed and introduced by the Treasurer, and. as a result of our deliberations, desire to recommend to the Blouse a number of amendments to the bill, some of a minorcharacter dealing with more or less machinery provisions, and some of an important character which we mention specifically hereunder: -

1.   The statutory period for the aggregation of gifts for the purpose of ascertaining the rate of duty applicable to the particular gift, and for the purpose of ascertaining whether the aggregate value of the gifts exceedsthe general exemption of £500 (which is allowed under the bill), should be reduced to a period of three years extending eighteen months prior to the date of the particular gift and eighteen months subsequent to that date.

2.   Doubt existed as to whether baddebts written off would be exempt from the operations of the bill.Itis recommended that this matter be placed beyond doubt by amending clause 14 of the bill (which deals with exemptions) for the purpose stated.

3.   The provisions of sub-clause (c), clause 14, of the bill limit the exemption of charitable gifts. The clauseas drawn was copied from the exemption clause in the Estate Duty Assessment Act, but it is considered that in legislation of the nature now before the House this provision should be liberalized to embrace gifts to institutions such as -

The Australian Mothercraft Society ;

Bluebird Free Kindergarten;

Children's Library Movement:

Country Women's Association :

Welfare Clubs;

Hammonds Pioneer Homes;

Sporting clubs and associations. lt is recommended, therefore, that gifts to all institutions, organizations or bodies of persons not formed or carried on for the profit of any individual should bc exempted.

4.   The exemptions granted by the bill for contributions by an employer to a fund to provide for pensions for his employees and also for direct payment by the employer to employees, should bc widened to include pensions paid to employees' dependants. The proposed amendment also includes pensions paid to the employee during invalidity while ho continues in employment, and also to provide for thu exemption of pensions paid to dependants upon the death of the employee. thu proviso following this sub-clause limits the exemption for such payments if the payment is made to an employee connected by ties of blood or marriage to the employer. ' This proviso should bc deleted from the bill. The committee is of the opinion that this is unnecessary, as the question of whether the payment is a bona fide one is a question of fact and should be easily ascertainable.

5.   The provision in thu bill exempting gifts made by the same donor to thu same doner up to an aggregate of £20 in value during the proposed reduced statutory period of three, years should also be liberalized by increasing the aggregate value to £50. fi. The exemption provided in the bill for the gifts made for or towards the maintenance of the wife, husband or child of the donor, or for or towards the education or apprenticeship of a child of the donor, should also be extended to cover payments of this nature to a ward or any person, for or towards the maintenance or education of whom the donor contributes having regard to the legal and moral obligations of the donor to make such payments. This provision is, however, subject to the commissioner being satisfied as to the bona fide nature of the payment.

T.   ft is recommended that siu exemption bc provided in the case of payments made by an employer to augment the salary of an employee who has enlisted in His Majesty's Armed Forces. Gifts made for business purposes, i.e., subscriptions, ite., to local sporting and other bodies by companies or firms carrying on business in the district who make these gifts for advertising purposes are also recommended for exemption.

3.   Clause 10 of the bill provides that where the disposition of property is from, say, a father to a son for a small deposit and thu balance of the purchase money is left on mortgage with tlie father, that such balance shall not bc deducted in ascertaining the value of the gift.

The committee was faced with the fact that this would bring within the provisions of the hill many genuine sales, although the bill was designed only to catch what might be termed " colourable" transactions.

The committee realized that it was impossible in practice to distinguish, the "colourable" from the genuine transaction. However, a large measure of relief can be given to genuine transactions without seriously interfering with the application of the law to the " colourable " transaction by providing, that where any payment is made by the donee to the donor in respect of the mortgage debt within five years of the disposition of the property, the commissioner will re-assess the gift duty payable thereon by taking into account such payment, and will refund any gift duty found to have been overpaid as a result of that re-assessment.

0.   Clause 12 which deals with the question of when a gift is deemed to be made, should be amended to obviate the possibility of dispositions, which have been completed as between the parties thereto prior to the commencement of flic act, being deemed under the clause not to bc completed until after the commencement of the act. This might result from the use of the words " carried out in subclause (1.) and the words "carried out- or completed" in sub-clause (2). These words should be omitted and in sub-clause (3) the words " is not registered " should be altered to " is not lodged for registration ".

10.   'The charge imposed upon all property subject to gift duty by sub-clause (3) of clause 25, should be modified so that it will not affect a. bona fide purchaser for value without notice of the charge.

11.   The bill contains a right of reference to a valuation board in connexion with the value of real property, but in connexion with any other question arising in an objection the only right of appeal is to the courts.

Thu committee considered that as amongst other things the bill contains a number of provisions depending upon the opinion of the commissioner, there should be a right of reference to a board of review on such questions to obviate the expense attached to an appeal to the courts. It is recommended, therefore, that a number of new provisions should bc inserted in the bill giving a. right of reference to a board of review on all matters other than the value of property (real or personal). All questions of valuations will be the subject of a reference to the Valuation Board. There will be a right of appeal to the courts on any question of law.

12.   To prevent tlie exemption from duty under this bill of gifts of Commonwealth Inscribed Stock the committee recommends the exclusion of the application of the provisions of section 52a of the Commonwealth Inscribed Stock Act.

13.   The committee also recommends that a clause should bc inserted in the bill to provide for a. reciprocal rebate in the case of double gift duty under this act and under the law of any country outside Australia. This rebate is designed to operate only when the country outside Australia enacts a similar provision. The committee suggests to the Government that thu New Zealand Government should be approached in regard to the enactment of a reciprocal rebate in the New Zealand act.

14.   The committee considered the question as to whether marriage settlements should be exempt from gift duty. It was decided there was no justification for such an exemption.

15.   The committee recommends thai donorsbe exempted from the necessity of lodging returns of gifts which are exempt from duly under clause 14 of the bill. (Sgd.) j. Ii. Chifley. (Sgd.) J. H. Scullin. (Sgd.) A. W. Coles. (Sgd.) A. W. Fadden. (Sgd.) E. G. Menzies. (Sgd.) E. S. Spooner.

I take this opportunity to express the Government's appreciation of the work done by the committee in connexion with this bill, which in other circumstances would have been the subject of long and probably contentious discussion in this House. The right honorable member for Yarra (Mr. Scullin), and the honorable member for Robertson (Mr. Spooner), devoted a portion of their week-end, as a sub-committee, to the preparation of a report for the main committee. For those additional labours, they are entitled to particular mention. I believe that honorable members, as well as the Government, are appreciative of the way in which the committee has completed the task entrusted to it. I pay special tribute to the right honorable member for Yarra, who at all times is prepared to make available the benefit of his wisdom and experience whenever taxation measures come before this House. On behalf of the Minister who has assisted me in connexion with all of these measures (Mr. Lazzarini), as well as on my own behalf, I thank honorable members on both sides, as well as you, Mr. Speaker, and the Chairman of the Committees (Mr. Prowse), for the courtesy and consideration shown to us.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses I to 3 agreed to.

Clause 4 -

In this act. unless the contrary intention appears - "disposition of property" means any conveyance, transfer, assignment, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes -

(e)   the exorcise of a power of appointment of property, including any judgment or order of any court made in default of the exercise of the power by the donee thereof; and

Amendment, (by Mr. Lazzarini) agreed to-

That after the word 11 appears " the following words be inserted: - " ' Board of Review ' means a Board of Review constituted under tho Income Tax Assessment Act 1930-1940;".

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