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Tuesday, 18 September 1928

Mr LATHAM (Kooyong) (AttorneyGeneral) . - If a father desires to get rid of his property, he can do so, and then he does not derive income from it. In that case no question arises as to his liability to pay tax. But if, instead of adopting the natural course of transferring his property so that other persons become the owners of it, and have full management and control over it, he forms a trust, he lays himself open to the suggestion that he is not making a genuine transfer which will confer full rights upon his children.

Mr Maxwell - He does not set out to make a transfer of ownership of the property, but he is distributing the income in reality, and not in pretence. The "members of his family are not dummying for the father, but are getting a real share in the profits.

Mr LATHAM - If it is admitted that his purpose is the evasion of taxation, his case would certainly fall within this provision. I can answer that quite definitely. I point out, however, that if a man does desire to get rid of his property, and does not desire to retain, in fact, the degree of control over it, which he is pretending to abandon by the legal form which he adopts, it is a very easy thing for him to do so. He can make an ordinary transfer of property in full ownership, and then no difficulty arises. But when a person has been running a business for some years, and all at once brings in as partners three or four members of his family who have had nothing to do with the business, who may have businesses of their own, or who may be living in other parts of the country, it is a very easy conclusion to draw that his object is to evade taxation. The policy of Parliament, as already expressed in the case of husband' and wife partnerships, is that no difficulty shall be placed in the way of a mau making a genuine transfer of property, but if he adopts a form which, under the appearance of a real transfer, enables him still to exercise effective control, he must be treated as if he were still the substantial owner of the property concerned.

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