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Wednesday, 11 November 1964

Senator McKENNA (Tasmania) (Leader of the Opposition) . - I should- like to make two submissions to the Minister for Civil Aviation (Senator Henty). The first one relates generally to the proposed new section 80a. The thought in my mind is this: Many private companies of today have shares issued in different classes, with variable dividend rights and without specific rights on reductions of share capital or liquidation. If such a company incurred a loss, it would be precluded from any share transfers of, say, a class of shares, even if only a small percentage, until after the year of income in which losses were recoupled. The submission is that it is reasonable that the trafficking in loss companies should be restricted or eliminated, but on the other hand it is thought that bona fide write-offs by companies should not prevent reasonable internal transactions in shares as so envisaged. I take it that what is in mind in this submission is that there may be reconstructions in a company, particularly by a reduction of capital. I invite consideration by the Minister' of whether a variation between the shareholders in the year of income and in the year of the loss which it is sought to use to offset profits in the first mentioned year, would negative the right to offset the loss.

The second submission I put is in these terms: In section 170, sub-section (2.) of the Act it is provided that where a taxpayer has not made to the Commissioner a full and true disclosure of all the material facts necessary for his assessment, and there has been an avoidance of tax, in a case where there is no fraud or evasion the Commissioner may amend the assessment within six years. That is the present Jaw. It is agreed that the Commissioner should be entitled to amend where an attempt has been made by the taxpayer to withhold relevant information, particularly as the onus of proof is on the Commissioner to prove that there has not been a true and full disclosure.

I turn now to proposed section 80d, which provides that the Commissioner may amend an assessment for the purpose of giving effect to five sub-sections - they are set out in the proposed new section - if the amendment is made within six years after the date upon which the tax became due and payable under the assessment. The submission that has been put to me is in these terms: The proposed section 80d referred to in clause 17 of the Bill goes much further and provides that the Commissioner may amend an assessment if the amendment is made within six years after the date upon which the tax became due and payable under the assessment and .this, of course, will shift the onus of proof from the Commissioner to the taxpayer to prove that the assessment should not be amended. I invite the Minister to look at the four sub-sections of section 80b to which reference is made - and perhaps to section 80d - and indicate whether in the view of the Government there is any element of trickery in the subsections that I have mentioned and whether the onus does fall upon the taxpayer or upon the Commissioner of Taxation. If the Minister is in a position to comment on those two matters I would appreciate it.

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