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Wednesday, 6 May 1942

Mr CHIFLEY (Macquarie) (Treasurer) . - by leave - I move -

That thebill be now read a second time.

When the bill for the principal act was under consideration in the Senate last year, the Government gave an undertaking that two amendments then proposed would receive consideration and, if acceptable, would be included in an amending measure at the first available opportunity. Those amendments have been considered and, having been found acceptable by the Government, are included in this bill.

The first amendment concerns the definition of " disposition of property " in paragraph e of section 4 of the principal act. That definition includes, as a disposition of property -

The exercise of a general 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).

It was represented to the Government that almost invariably a judgment or order of a court made in default of the exercise of a general power of appointment had the same effect as if the general power of appointment had been a limited power of appointment, and had been exercised as such. The Government does not desire that the exercise of a limited power of appointment shall bring the property affected thereby under the provisions of this act, and has, therefore, agreed that the words in brackets in that provision shall be omitted.

The second provision of this bill is an amendment to section 12 of the act which defines when a gift is deemed to be made. Sub-section 3 of that section provides that when any gift is made in respect of property comprised in any instrument of gift requiring registration under a State law, the gift, for the purposes of the act, shall be deemed to be made at the date when the instrument is lodged for registration. It was represented to the Government that this provision would inflict hardship in cases where the donor had actually and irrevocably divested himself of the property prior to the commencement of the act, but, through circumstances not within his control, had not lodged the instrument for registration until after the commencement of the act. The case was mentioned of a donor who had signed the transfers of a property several months prior to the commencement of the act, but as they had to be sent to several States to secure the signatures of the transferees a considerable time elapsed before they wore ready for lodgment. The donor handed the documents to his solicitors for presentation to the Stamp Duties Office for payment of stamp duty and to the Registrar-General's Office of the State concerned for registration of the transfers, about a week prior to the commencement of the act. The solicitor in the normal course of business lodged them with the Registrar the day after the commencement of the act. Under the law as it stands at present this disposition of property would be subject to gift duty owing to fortuitous circumstances outside the control of the donor.

Another class of gift brought within the provisions of the act, but which certainly was not intended to be made liable to gift duty, is a settlement made in Victoria with dispositions taking effect after the death of the settlor.For example, a settlor might settle certain property upon trustees with directions that the income therefrom was to be paid to his wife during his life and that upon his death the settled property was to be divided between his wife and children.

Section 177 of the Probate and Administration Act of Victoria requires that such settlements shall he registered within twelve months of the death of the settlor, otherwise they are invalid. Under the law such settlements, if registered after the commencement of the act, would be liable to gift duty, although the donor had entirely and irrevocably divested himself of the property perhaps 35 years previously. The Government has agreed that it would be inequitable to bring such property under the provisions of the act. In order to overcome these anomalies the bill proposes to insert in the act a proviso to sub-section 3 of section 12, which will place outside the operation of the act any gift of property made prior to the commencement of the act, but in which the instrument had not been registered until after the commencement of the act, where the Commissioner is satisfied that the donor, prior to the commencement of the act, had done everything in his power to divest himself of the property.

The opportunity afforded by the necessity to introduce these amendments has been taken to insert several other minor amendments for the purpose of making the act more efficient, and bringing it more into line with the Estate Duty Assessment Act and certain amendments which it is proposed to make to that act.

The most important of these is an amendment of the provision in section 18 which gives to the Commissioner certain power in regard to the valuation of the shares of a private company. It has been decided to extend these powers somewhat, so that the Commissioner may entirely ignore any artificial restrictions contained in the Articles of Association of any particular company regarding the transfer of shares or the methods of valuation thereof. The provision to be inserted is similar to the provision proposed to be inserted in the Estate Duty Assessment Act, and is substantially the same as the provision in the Stamp Duties Act of New South Wales, for the purpose of valuing the shares of such companies for probate duty purposes. It has also been found necessary to amend several of the provisions of section 14 - the exemption section of the act - in order to avoid hardship in respect of gifts that do not entirely comply with the letter, but do comply with the spirit of the. present law. The amendments will have the effect of giving more adequate expression to the spirit of the law.

There is also a provision confining objections to amended assessments to the increase of liability made by such amendments. This brings the act into conformity with other taxation acts.

It is proposed that before proceeding to the committee stage, the bill shall be considered by a special committee, which is representative of both Government and Opposition parties. Thus any differences in regard to detail may be resolved to the satisfaction of all parties, and the passage of the measure greatly facilitated.

Debate (on motion by Mr. Fadden) adjourned.

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