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Wednesday, 10 May 1961

Mr HULME (Petrie) (Minister for Supply) . - I move-

In the definition of ' export market development expenditure' proposed section 51ac. - (1.), omit paragraph (e), insert the following paragraph: - " (e) so much of any outgoings incurred by a person as -

(i)   has been, or is to be, paid or reimbursed to him by another person; or

(ii)   is incurred in or in connexion with services or doing any thing for which he has been, or is to be, paid by another person;".

This amendment will not involve any change of substance in the proposed section51ac. The sole purpose of the amendment is to make clear the basic intention of the paragraph concerned.

As explained in the printed memorandum which has been circulated, the purpose of paragraph (e) of the definition of " export market development expenditure " is to ensure that the special deduction is not available to a taxpayer who, though incurring export market development expenditure, is paid or reimbursed for that expenditure. In other words, the provision is intended to avoid the allowance of the special deduction more than once in respect of the same expenditure - firstly, in the hands of the enterprise for which the export promotion is undertaken and, secondly, in the hands of the person or company engaged to carry out the actual promotion work as a paid service.

As paragraph (e) is at present expressed, there may be doubt as to whether it would be effective in circumstances where a taxpayer engages an agent to carry out a project on his behalf but does not specify the particular manner in which the payment for the project is to be applied - for example, the payment of an inclusive fee for carrying out a programme of market research. The substituted wording is designed to ensure that the exclusion under paragraph (e) will be effective in all circumstances.

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