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Tuesday, 18 September 1928


Dr EARLE PAGE (Cowper) (Treasurer) , - I shall deal first with the question of the taxation of ex-Australian income. It will be remembered that, as a result of a discussion which took place in this chamber, the Government, promised to inquire into that matter. It has done so, very exhaustively. The further it proceeded, the more difficult appeared to be the prospect of evolving a satisfactory method of taxing exAustralian income, and thus effecting the purpose of the honorable member for Swan, that of bringing more money into the Commonwealth.


Mr Gregory - I did not view the matter in that light.


Dr EARLE PAGE - If it would not bring in more revenue, and it proved infinitely vexatious, I do not think any honorable member would suggest that the tax should be imposed.


Mr Gregory - It is a matter of equity.


Dr EARLE PAGE - We found that the great difficulty which stood in the way was the fact that it invariably forced the imposition of double taxation. That would be extremely inequitable, especially in relation to British citizens who have invested money in Australia or Australians who have made investments in England or in British possessions. It is worth while considering the matter very closely from that aspect. The Government has done so. It has found that in every case in which taxation was imposed with respect to assets held outside the taxing country the force of circumstances compelled the making of a provision for the remission of the duplicate tax. New Zealand agreed not to tax the income received from such assets where a tax had already been imposed upon it in the country from which it was derived. The authorities in Canada decided that if a tax was levied in another country they would give a corresponding rebate. An arrangement entered into with the British Government prevents double taxation from being levied. That provision, which is embodied in section 18 of the prncipal act, operates substantially to the benefit of Australian residents. If we were to encroach on the fields of taxation controlled by the British Government - which we should do if we taxed income on British assets held by Australian residents - the British Government would probably revise the existing arrangement, which represents a substantial concession to us. While recognizing the desirability of preventing certain inequities, the Government also realized the need for caution. It, therefore, decided to ascertain the views of the governments of the countries in which Australian residents had large investments. Honorable members will understand that these investigations take time. The Prime Minister has communicated with the various Governments concerned asking for the fullest information on these matters. Pending the receipt of their replies, it would be unwise to pass hasty legislation, which might adversely affect the making of reciprocal arrangements with other countries. The Leader of the Opposition (Mr. Scullin) suggested that if this question of the taxation was settled we should have cut the Gordian knot in connexion with profits. But New Zealand, which does tax some ex-New Zealand investments, has found it necessary to legislate on lines which are almost identical with the proposals in the bill now before us. Section 88 of the New Zealand Act of 1923 reads -

Whenever by reason of the manufacture, production or purchase of goods in one country and their sale in another, or by reason of successive steps of production or manufacture in different countries, or by reason of the making of contracts in one country and their performance in another, or for any other reason whatever, the source of any income is not exclusively in New Zealand, that income shall be apportioned between its source in New Zealand and its source elsewhere, or attributed to one of such sources to the exclusion of the other, in such manner as may be prescribed by regulations made under this act; and in default of such regulations, or so far as they do not extend, then in such manner as the Commissioner thinks just and reasonable, having regard to the nature and relative importance of the sources of that income; and the income, so far as so apportioned or attributed to a source in New Zealand, shall be deemed to be derived from New Zealand, and shall be assessable for income tax accordingly.

New Zealand's problem is very similar to ours, because she also is a primary producing country; the profits on the sale overseas of New Zealand produce must be apportioned between New Zealand and other countries. Her position in relation to imports is also similar to ours.


Mr Maxwell - Is there no appeal against the Commissioner's decision?


Dr EARLE PAGE - No; it may be done in such manner as is prescribed by regulations, or, otherwise in default of regulations, in such manner as the Commissioner thinks just and reasonable. It is clear from the cases referred to by the Attorney-General that, in the absence of definite lines upon which a simple and economical administration of the act would be possible, this power must be vested in the Commissioner. The fifty-fifty arrangement which has been suggested as a general principle by the court and the Board of Review would in some cases be absurd. The infinite variety of products sent overseas and brought into this country would necessitate a large number of different percentages and apportionments being made. Regulations would, no doubt, be issued, but they would deal only with the broad principles. It would not he possible to provide for every case by regulation. In cases to which the regulations would not apply the Commissioner would have to act on his own discretion.


Mr Gregory - Does the New Zealand act provide for a court of review ?


Dr EARLE PAGE - No. In this matter we are faced with the necessity of protecting the revenue. If we adopted a 50 - 50 basis when it should be a 98 - 2 basis, the result would be an enormous loss of revenue to Australia, and, as a result, we should have to increase the general rate of taxation, which would press harshly upon all other taxpayers in the community. In the case of many of our exports, the basis should be 95 - 5 or 90-10, rather than 50-50. The basis set out in this measure is regarded by the Government as the only possible one in the circumstances.







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