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Wednesday, 11 November 1964

Senator HENTY (Tasmania) (Minister for Civil Aviation) . - I have already indicated that the Government cannot accept the suggestion to appoint a select committee to investigate taxation matters. I think all honorable senators should realise the difficulties, not only of this particular Bill, but of the taxation law as a whole. Senator McKenna said that the matter of discretion in the Bill is not new. The Income Tax and Social Services Contribution Assessment Act is permeated with discretion because over the years great difficulties have arisen with regard to individual cases. I discussed the matter of trusts and the tax rate of 10s., raised by Senator Wright, with the Commissioner of Taxation. The Commissioner told me that the tax rate of 10s. in £1 would be applied as a general rule only if it were in his mind that the matter before him was one of tax avoidance.

Senator Wright - If that could be inserted in the Bill-

Senator HENTY - This is one of the discretionary powers. I am stating what the Commissioner advised me and Senator Wright was advised of this before he came into the chamber. This is not new to him. The Commissioner said that the 10s. rate would be -applied only in the case of a tax avoidance. The normal family trust would not be affected. But if it were clearly established in the mind of the Commissioner that there was a tax avoidance, he would say to the trustee: " I believe that this is a tax avoidance and it is now for you to establish the fact in my mind that that is not so. If you cannot do that then 1 will continue to hold my opinion that it is a tax avoidance." The matter would then go to the independent board of review. That is a clear indication of how the 10s. rate would affect trusts. I did not think that the position had been fairly put by honorable senators and so 1 thought I should deal with it.

The only real beneficiary from a long protracted select committee hearing would be the tax avoider. Believe me, the recommendations of a select committee on income tax and tax evasion and avoidance would present a set of problems similar to those which the Ligertwood Committee presented. As Senator Benn stated, honorable senators should not think that the Ligertwood Committee found all the problems associated with taxation. A select committee would, in turn, present a set of problems which would take a long time to examine and this would only be to the advantage of the tax avoider.

I would point out to honorable senators that this is not an income tax bill. It is a bill to stop up the gaps allowing tax avoidance which have been quite legal but which have developed in such a way that they are not in the national interest and should be stopped up. The avoiders are the only people who would benefit from a delay. Senator Wood said that this Bill may cast the net too wide. That is a fair comment. It may cast a little wide in some odd cases perhaps but if that is so then, as the Treasurer (Mr. Harold Holt) has said, taxation experts and taxation organisations familiar with this particular field of tax avoidance can approach the Government and say that, in fact, the net has been cast too wide because it does take in certain cases. This is something that can be examined and, as the Treasurer has said, the legislation will be subject to amendment. I repeat again that, as in so many of these cases, it was found that by getting at the occasional tall poppy we hurt, to an extent, the small men in genuine commercial deals made in good faith. However, it was felt that the best and fairest policy for all was to bring this legislation in on 23rd October.

I say, with great respect, that I do not believe delay is advisable.

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