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Friday, 14 September 1928


Mr BRENNAN (Batman) .- The entry of the Commonwealth into this domain of taxation, as with some other forms of taxation, was made in 1914, on account of conditions brought about by the war. Prior to that date the exploitation of this field was left to the Governments of the different States, who, it must be admitted, exploited it fairly fully.

Persons of a hopeful nature supposed that the activities of the Commonwealth in this direction would be only temporary; but, true to tradition, the tax having been imposed has continued to swell the revenues of the Commonwealth and to add to the general burden of taxation under which the people labour, and relief from which they expected the present Government to afford them.

The general principle of this measure, so far as I have been able to familiarize myself with its provisions, is not one to which any great exception can be taken. It probably represents an honest endeavour by the taxation officials to stop up those fissures through which there have been undesirable leakages of public revenue. When taxation weighs heavily there is naturally a disposition to avoid paying it wherever possible. It must be acknowledged that this particular form of taxation does weigh heavily, almost oppressively, upon certain sections of the community. I am not customarily regarded as a spirited defender of any phase of big business; but I am bound to admit that even in the case of fairly large estates, especially those that are in the nature of business undertakings, the imposition of this tax sometimes causes considerable embarrassment. When the death occurs of the person upon whose initiative and skill the success of a business entirely depends, the procuring of the ready money necessary to pay the estate duty is frequently a matter of real concern to the wife and other dependants of the testator or an intestate. Generally speaking, the amount of tax is considerable, more particularly under the laws of the States. In the case of small estates the position is even more serious. The testator may be the owner of a humble residence, worth not more than £1,200. For that sum nowadays, the average working man can secure little more than a cottage, and his widow frequently experiences great difficulty in finding the money' to pay federal and Stare estate duties, in addition to other fees, and in some cases the legal expenses connected with administration. This tax operates more harshly than almost any other form of taxation ; or at any rate it is felt more directly and more poignantly than any with which I am familiar. The Commonwealth duty, in principle, is levied upon the ; taxable value of the property owned by the deceased at the time of his death and passing to other persons under the terms of his will or by reason of an intestacy. That is a summary of . what constitute*" taxable property.

As I have said, and as the Treasurer said when introducing the bill, it has been found that in this general field of taxation the law leaves loopholes of escape for those who certainly should pay taxation. Gifts passing from a living person to another within a year of the testator or intestate's death may be charged with duty; but it has been found that apparently genuine transactions of transfers for value between relatives, which are really in essence not transfers for good consideration but gifts, have not come within the law. It happens therefore that instead of the parties making gifts from one to another which would come within the law both as to gifts and as to estate duty later on, they make these transfers for value; but the value instead of being the real value is merely a nominal value agreed upon simply to escape the provisions of the law in regard to duty. I have not the slightest, doubt that such transactions, which are clearly evasions of the law, frequently occur. Of course it would be contrary to justice that a second impost should be placed upon an estate merely because the consideration money in connexion with such a transfer was comparatively light. Even in the ordinary course of buying and selling it sometimes happens that property passes from a transferee to a transferor for a small consideration. In other words, the purchaser makes a good bargain. In such cases if the property were assessed by a competent authority it would often be valued at considerably more than the amount paid for it, but no further impost would be made for duty. I submit therefore that while this new provision is justifiable in certain cases it should not be used to levy a second duty unjustly, merely because the original consideration appeared upon the face of it to be low.


Dr Earle Page - The provision will only apply to relatives by blood. Ordinary purchasers will not be affected. '


Mr BRENNAN - That is so; but even a purchaser who is a relative by blood may carry out such a transaction in good faith although the consideration may, in the opinion of some people and even of experts, be inadequate. There is no reason why every transaction should be regarded with suspicion.

Certain provisions in the bill apply to the collection of duties following the death of a joint tenant. In the case of joint tenancies the property passes to the survivor or survivors. The Treasurer, and apparently the Taxation Department, consider that it is unjust that no taxation should be collected in respect of property so passing. The first comment upon that is that every estate which is the subject-matter of a joint tenancy must sooner or later come into account for duty. The Treasurer has suggested that joint tenancies may be given continuity like certain trusts, and that there might he something in the nature of an endless chain which would prevent the property from ever coming into account for the purposes of this duty. That suggestion seems to me to be a little far fetched. Such a situation could be provided against by enacting that the number of changes in proprietorship should be limited. If, let us say, three persons constitute a joint tenancy it might be provided that the property could pass to two of the joint tenants in the event of the death of one of the three, and subsequently to the survivor in the event of the death of the other, and that it must then come into account for taxation purposes. However, the Treasurer proposes to take "a short cut and impose the duty when the first break occurs in the joint tenancy. That appears to me to be to some extent a new departure.

The Treasurer also referred to cases in which the whole of the property of a deceased person has been transferred during his lifetime. The axe of the taxgatherer cannot fall upon any one in those circumstances, for all the property having been alienated, no question of probate arises and no letters of administration need be taken out. That appears to me to be an anomalous position. There are, of course, provisions in the Administration and Probate Act to compel persons to bring estates into probate, and creditors may enforce the winding-up of a deceased estate; hut where there is no estate because of the alienation of it by the deceased prior to his death nothing can be done. It seems to me to be logical that duty should be collected in such circumstances on parallel lines to those employed in respect of other alienations within twelve months at least of a person's death. I realize that there is some danger in continuing an obligation upon a property after it has changed hands. It is always dangerous to attempt to follow property when it passes in good faith and for value from one person to another, but apparently the qualifications included in the bill will safeguard the position.

This measure may not excite much discussion and at the moment I do not take exception to it in principle. It appears to be justified by the experience of the Taxation Department. It will remove some anomalies and prevent certain evasions which have hitherto occurred. I can only hope that the tax will be gathered equitably and diligently by the Treasurer after the bill is passed.







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