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Wednesday, 7 March 1984
Page: 528


Senator CRICHTON-BROWNE(12.35) —We are debating the Income Tax Assessment Bill (No. 5) 1983. Details of the proposed amendments contained in this Bill have been very fully, very well and very clearly explained and debated by my colleagues. Rather than again canvass all the details of those amendments I will restrict myself to the retrospective provisions of clause 5 (1 ) of the Bill. This clause proposes to amend section 23F of the Income Tax Assessment Act 1936, which relates to superannuation funds. It proposes to make those amendments retrospective to 1 July 1977. Section 23F funds, of course, are private superannuation funds set up by employers for employees. The objective of the amendment to section 23F funds contained in the Bill before us is to remove abuses resulting from contrived and artificial schemes.

Clearly there have been abuses of the very worst kind. Perhaps there is no better example than the Raymor case, which concerned a superannuation fund which was allegedly set up to provide benefits for employees of the company. In fact the real purpose of that fund was not to provide benefits to the employees for their years of service but was rather a blatant process to artificially provide taxation deductions for the employers at the expense of the employees. And what an expense it was. As the various employees approached retiring age and became eligible for superannuation benefits they were removed from the employers' payroll. By way of various confidence tricks they were persuaded to leave their employers and axiomatically to surrender their rights and entitlements to the fund. It was disgraceful that they should have been denied their benefit. The scheme was set up to be of benefit to the employees, not the employers. The employees were removed from the payroll when the time they could enjoy the benefit of the scheme approached. Those whose jobs were in greatest danger were those who had served the firm longest and presumably were in the older age bracket. They would have found it more difficult to find alternative work. Such conduct by employers can, of course, only be abhorred. It should create outrage within the whole community.

However, irrespective of the amendments before us, I would have thought that such schemes and arrangements would not have fallen within the terms of the provisions of section 23F. In fact, I would have thought that probably they would have run the very real risk of falling within the terms of the Crimes Act, particularly when one considers the opinion Brinsden QC, now a judge of the Supreme Court of Western Australia, gave in an earlier case. Surely the new, enlightened interpretation which was cast upon the Income Tax Assessment Act by the High Court of Australia would allow section 260 to be available. I certainly think that part IVA should be available. Section 170 seems to me to be appropriate, as was suggested by Senator Hill. That section provides an opportunity for the Commissioner of Taxation, notwithstanding the fact that assessments have been made, to reopen the case and to issue new assessments. If any one of the provisions I have referred to apply, it would seem totally unnecessary to have legislation of a retrospective nature such as that we have before us at the moment.

However, putting that aside, I record the view that I expressed previously: I have grave objection to the principle of retrospectivity. On my reading of this Bill as it relates to section 23F of the Act, not only will it catch employers of the type in the case I referred to but also it will catch many other innocent people. They will face not only a retrospective tax but also a new tax. I am moved to observe that the judge in the Kelly v. Raymor case referred his judgment to the Attorney-General of New South Wales and to the Commissioner of Taxation. I am sure that he did not do that for purely academic reasons. I am sure that he did it because he believed that enforceable provisions might come within the power of either the Commissioner or of the Attorney-General.

In regard to retrospectivity, I refer to no less a person than Mr Temby QC, the Government's new Director of Public Prosecutions. In referring to retrospectivity he said:

What justification can there be for making a person suffer on account of actions which were legal when performed?

He went on to say:

Any person who understands the topic, whatever view they might have about the moral obligation upon all to pay a fair share of the cost of running the community, should be outraged by that which is proposed.

Again referring to the principle of retrospectivity, he concluded:

All who care about the rule of law should feel outraged by such a proposal.

That is what Mr Temby thought about retrospectivity. In regard to catching the innocent, I notice that the Commissioner of Taxation, when responding to the previous Treasurer's suggestion that section 23F schemes be examined, made this observation:

Because in revenue terms we have many larger tax avoidance problems in other areas and also because of the need to make certain that no avoidable difficulties are created in genuine superannuation funds I would recommend that you await the comments of the Task Force.

So clearly at that time the Commissioner had grave concern that the type of legislation which we now have before us would catch innocent people. As I said, my fundamental objection to the legislation before us is its retrospective nature. It is retrospective, I might add, to 1 July 1977. While many provisions within the total package of the Bill give me grave concern, I would be prepared to support the Bill if clause 5 were deleted from it. In the event that clause 5 is still in the Bill at the time of the third reading, I propose to vote against the whole package.

Debate interrupted.

Sitting suspended from 12.42 to 2 p.m.