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Thursday, 17 August 1989
Page: 262


Senator WATSON —My question is also directed to Senator Button, in his capacity as Minister for Industry, Technology and Commerce. I refer to the Minister's attempt yesterday to defend the Budget decision on company tax collections by arguing that companies enjoyed a deferral not available to individuals. Does the Minister acknowledge that the proposal to collect 85 per cent of company tax within 15 days of the end of the financial year could lead to great cash flow difficulties because of extended credit terms inherent in business operations-sometimes between 90 and 120 days-offered by certain types of businesses? In other words, does he agree that the circumstances of companies and individuals are different because wage and salary earners get paid evenly over the year whereas many commercial enterprises have an uneven cash flow and that cash flow generally lags reported profit? Does he further agree that there will simply not be enough accountants to finalise the accounts for small corporations in time for them to pay the first instalments of tax within 15 days of the end of the financial year? This will be particularly critical in circumstances of declining profitability compared with the previous year. Will the Government reconsider its Budget decision to penalise small businesses which will either have to estimate income for the year just ended or pay tax on the basis of the previous year's income, which may bear little relevance to their current situation?


Senator BUTTON —Of course, circumstances vary from business to business. Some companies are in the category which Senator Watson describes; others are not. He asked whether--


Senator MacGibbon —You would not know, anyway. Why don't you twist his question around so you can make up what you want to say.


Senator BUTTON —I really have nothing much to add to what I said yesterday, except to comment on some of the points that Senator Watson advanced in his question. He referred to declining profitability. I do not know whether that is his projection; it is not a projection I see coming from anywhere else at present. Opposition senators must get used to the fact that company profits in this country have been at their highest level ever in the last four years. Senator Watson said that there would not be enough accountants to work out all these problems. I can assure him that he is wrong about that. Sadly, Australia has the highest ratio of accountants to other professions compared to any country in the world. We ought not be too worried about that. I have nothing to add to the answer I gave yesterday. The measure will be introduced and adjustments will have to be made by some companies.