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Friday, 1 September 1989
Page: 806

Senator WATSON —I direct my question to the Minister representing the Treasurer. Is it a fact that, under the disguise of finetuning and tax avoidance amendments, the Government plans to retrospectively change the capital gains tax rules to charge far more tax on the sale of some shares, particularly rights acquired before 16 August 1989? Is it a fact that tens of thousands of shareholders-many of them innocent-who followed the Treasurer's own rules issued just four years ago will now be charged considerably more capital gains tax than under the earlier pronouncements? Will the Minister give an assurance to the Senate that any amendments to the cost base of shares applies only to shares acquired after 15 August 1989?

Senator WALSH —Senator Watson did not give me a copy of the question, but he did tell me this morning that he was going to raise this matter. Unfortunately, because Question Time is so early, I have not been able to get a definitive statement from the Treasurer's office. However, Senator Watson's question, I presume, is based on a press release put out by Mr Risstrom on Monday of this week. I believe that Mr Risstrom has misunderstood the proposal which was outlined in the Budget Papers and also in the press release issued by the Treasurer on 15 August. Therefore, I do not believe, on the advice I have got so far, that the provision will operate in the way in which Mr Risstrom believes it will operate.

Senator Stone —Mr Risstrom claimed to have consulted both the Treasury and the Taxation Office.

Senator WALSH —I have read the press release, too. On the information available to me now, Mr Risstrom has misunderstood it. If I get a definitive comment from the Treasurer's office before the end of Question Time, I will provide it to the Senate at the end of the Question Time.

Senator WATSON —Mr President, I ask a supplementary question. Has not the Taxation Office confirmed that this retrospective action was not intentional?

Senator WALSH —I am leaving aside the reference to retrospective action because the basis of the misunderstanding is the valuation which will be placed for capital gains tax purposes on a rights issue-possibly on some bonus shares, but I am not sure of that-issued to pre-existing shareholders after September 1985. Even on Mr Risstrom's interpretation, which I understand is wrong, there would certainly be no application of tax for shares which have already been sold. Even on what I believe to be Mr Risstrom's misunderstanding, there would be capital gains tax liability implications only for shares sold as from the Budget night.