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Wednesday, 3 June 1942

Senator KEANE (Victoria) (Minister for Trade and Customs) (5:55 AM) . - I move -

That, after clause 18, the following new clause be inserted: - " 18a. Section one hundred and three of the principal act is amended by omitting paragraph (a) of the definition of 'distributable income ' and inserting in its stead the following paragraph: -

(a)   all taxes which are paid in the year of income -

(i)   under this or the previous act;

(ii)   under any law of a State or of a Territory being part of the Commonwealth imposing a tax upon incomes, if the taxes have not been allowed or are not allowable as deductions under section seventy-two of this act in any assessment for any financial year; or

(iii)   in any country out of Australia in respect of income of the company which is taxable under this or the previous act, less any refund received in the year of income of any tax to which this paragraph refers ; and ' ".

The amendment to section 72 of the principal act contained in clause 8 of this bill will have the effect of withdrawing the deduction previously allowed for State and territorial income taxes paid during the year of income. Consequently, State and territorial income taxes paid in respect of the financial year 1941-42, during the year ended the 30th June, 1942, will not be allowed as deductions from income derived during that year. The withdrawal of this deduction follows the recommendation of the special committee which considered that with the introduction of a uniform income tax there would be no necessity for such a deduction during the period of the scheme. In fixing the rates of uniform income tax which it recommended, the committee took into account the fact that such a deduction would not be allowed from the income of the year ending the 30th June, 1942. As the non-allowance of State and territorial income taxes as a deduction from assessable income has the effect of increasing the amount upon which tax on the undistributed income of public and private companies is levied, representations have been received from various bodies requesting that State income tax paid for the financial year 1941-42 should be allowed as a deduction for undistributed profits tax and private company tax purposes. These requests are considered reasonable, and it is there- fore proposed, by the amendment that I have moved, to allow, for the purpose of arriving at the distributable income, and, therefore, the undistributed amount of a private company, a deduction of all State and territorial income taxes which have not been allowed as deductions in any assessment for any financial year.

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