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Wednesday, 20 May 1936

Senator COLLINGS (Queensland) . - I ask the Minister to explain this provision. If a resident in Australia conducts a business transaction overseas, the income from which is liable to Commonwealth income tax, will it be necessary for purposes of assessing tax to convert every transaction into Australian currency at the rate ruling on the date on which the transaction was made? I foresee difficulty in dealing with such conversions from sterling to Australian currency.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - In view of the present relation of Australian currency to sterling we must have a provision of this nature; the tax will be made on the profit resulting from such transactions.

Senator COLLINGS - In respect of what date will the value of Australian currency be computed?

Senator A J McLACHLAN (SOUTH AUSTRALIA) - The date on which the profit results; if a taxpayer makes a profit of £100 to-day in London his profit would amount to £125 in Australian currency.

Senator COLLINGS - But the department will not know about the profit at the time it is made.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - The taxpayer will have to show in his profit and loss account the date on which he made the profit.

Senator Leckie - But he might make twenty different transactions in a year.

Senator COLLINGS - I take it that the intention is where ataxpayer shows, in his return, that he has made a certain profit during the year, he shall suffer no injustice; therefore, the exchange rate is to be taken into consideration. How will the department know the particular date in respect of whichthe rate of exchange on a transaction is to be calculated when it is informed of such a transaction only at the end of the financial year ?

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