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Tuesday, 26 November 1974
Page: 2797

Senator WRIEDT (Tasmania) (Minister for Agriculture) -I move:

That the Bill be now read a secondtime.

I seek leave to have the second reading speech incorporated in Hansard.

The ACTING DEPUTY PRESIDENT-Is leave granted? There being no objection, leave is granted. (The document read as follows)-

This Bill declares the rates of income tax payable for the 1974-75 financial year. The main features of the Bill are a new personal tax scale, reduced rates of company tax and a surcharge on property income. The new personal tax scale will result in lower tax for all persons except those with quite large incomes- the greatest reductions will be at the lower and middle income levels. For example, the tax payable on a taxable income of $4,000 will be reduced by $188.30 or 3 1.0 per cent from the tax at last year's rates and at a taxable income of $6,000 the reduction will be $259.90 or 20.6 per cent. The combined effect of the new rates and the rebate for low income earners with dependants will be to reduce very substantially, and in some cases extinguish, the tax otherwise payable by these persons. For example, a taxpayer with a wife and 2 children, with a taxable income of $2,732, after allowance of dependants and other deductions will be freed from tax. For 1973-74 his tax would have been $302.17. The tax payable by a taxpayer with a taxable income of $4,000, after deductions for a wife and 2 children, will be $303.52 for 1974-75, compared with $608.30 for 1973-74-a reduction of over 50 per cent. Revised tax instalment deductions taking into account the changed rates of tax announced in the Budget Speech have applied since 1 November. These will be further changed as from January 1975, so that, from January, pay packets will, in addition, reflect broadly double the cuts that are being made in the rates announced in the Budget. The new rate scale will also be reflected in provisional tax in respect of 1974-75 incomes.

The Bill also proposes a tax surcharge on property income included in the 1974-75 taxable income of an individual or the net income of a trust estate. The surcharge will not apply, however, where the taxable or net income is $5,000 or less. The surcharge will be based on the amount of tax on property income calculated by reference to the average rate of tax applicable to the whole of the taxable income. The rate will be 10 per cent where the taxable income is $5,500 or more and there will be shading-in rates applying in the range $5,001 to $5,499. The effect of the surcharge will be quite moderate. In the case of a person with taxable income of $ 10,000, onequarter of which is from property, it will add only $69.50 to ordinary tax of $2,780. Despite the surcharge this person will pay less tax for 1974-75 than would have been payable on the same taxable income for 1973-74.

For the 1974-75 financial year the special rebate of tax for aged persons is to be a basic amount of $130. It will be recalled that the rebate was introduced as a transitional measure last year, as part of the package of measures associated with the commencement of phasing out of the age pension means test. It has now served its transitional role, but it is to be phased out gradually. While less than that allowed last year it will, when coupled with the reduced rates of tax applying to lower incomes, result in aged persons entitled to it paying less tax in 1974-75 than on equivalent 1973-74 incomes. The rebate will free from tax persons of age pension age for the whole of 1974-75 whose taxable incomes are $2,358 or less. For 1973-74 the corresponding amount was $1,921.

The Bill proposes that for the 1974-75 financial year the general rate of tax payable by public and private companies in respect of 1973-74 incomes will be 45 per cent. The proposed rate for public companies is2½ per cent less than for the 1973-74 financial year, and the Budget proposal to increase the rate for private companies to 47½ per cent is not being proceeded with. The rate of tax payable by co-operative companies and non-profit companies other than friendly society dispensaries on taxable income in excess or $10,000 will also be reduced from 47.5 per cent to 45 per cent. Other company tax rates will be the same as those that applied last year. The rate of tax payable in respect of the 1974-75 investment income of a superannuation fund that does not invest a specified proportion of its assets in public securities will be reduced from 47.5 per cent to 45 per cent, thus preserving the link between the rate of tax payable in these cases and that payable by mutual life assurance companies. Explanations of technical aspects of the Bill are contained in the memorandum I have had circulated. I commend the Bill to the Senate.

Debate (on motion by Senator Greenwood) adjourned.

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