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Wednesday, 31 August 1960


Mr Cairns s asked the Treasurer, upon notice -

1.   What was the value of (a) concessional deductions for (i) spouses, &c, (ii) first children, &c, and (iii) other children, and (b) each type of concessional deduction per taxpayer, for each grade of actual income shown in the thirty-eighth report of the Commissioner of Taxation?

2.   What was the reduction of net tax paid caused by the allowance of each type of concessional deduction for (a) all resident individual taxpayers and (b) resident individual taxpayers in each grade of actual income shown in the report?


Mr Harold Holt - The answer to the honorable member's question is as follows: -

A statement has been prepared and is set out below, showing for each type of concessional allowance for which information is available, the total amount allowed as a deduction in respect of returns of 1956-57 income. In this statement, " Other Deductions " includes amounts allowed not only for the other concessional deductions provided in sections 82a to 82j of the Assessment Act, but also for deductions such as subscriptions to business and professional associations and unions: one-third of calls paid to mining, prospecting or afforestation companies operating in Australia: gifts of £1 and upwards to public benevolent institutions, approved research institutes for scientific research, &C; zone and overseas forces allowances: living away from home allowances: rates and taxes for which the taxpayer is personally liable. Information is not available to show, either as a whole amount or in its dissected form, the amount that was allowed to each taxpayer entitled to a deduction. The amount which represents the average amount, spread over all taxpayers is obtained by dividing the total number of taxpayers or the total number of taxpayers in each grade of income into the total of the deductions or the total of the deductions allowed to taxpayers in that grade of income, as the case may oe, but as the result would be meaningless, it has not been done.

 

2.   Precise figures are not available but estimates of the reduction in tax payable due to the allowance of the concessional deductions mentioned are set out in the statement below: -

 


Mr Ward d asked the Treasurer, upon notice -

1.   Are company profits transferred to reserve taxable if later distributed in the form of bonus shares?

2.   If a new company is formed to take over an existing company, and it subsequently makes a distribution of its reserves by the issue of bonus shares, would this share capital be taxable?


Mr Harold Holt - The answers to the honorable member's questions are -

1.   Bonus shares are assessable income except where specifically exempted by the income tax law. Exemptions are authorized in respect of - (a) bonus shares issued in satisfaction of a dividend paid wholly and exclusively out of profits from the re-valuation of assets not acquired for re-sale at a profit or from the issue of shares at a premium (section 44 (2.) (b) (iii) of the Income Tax and Social Services Contribution Assessment Act 1936-60);

(b)   bonus shares issued in satisfaction of dividends which, if paid in money, would be exempt from tax. Dividends are exempt when paid out of certain exempt mining profits (sections 44 (2.) (a), 44 (2.) (b) (i), 44 (2.) (c), 44 (2.) (d), 44(3.) and 44(4.)) or from profits derived by private companies up to the end of the 1946-47 income year and subjected to undistributed income tax (section 107).

2.   Bonus shares distributed by the new company out of its reserves would be taxable unless qualifying for exemption under one of the classifications mentioned in the answer to 1.


Mr Ward d asked the Treasurer, upon notice -

1.   What items of expenditure incurred by business executives and included in what is referred to as " expense account " are allowable deductions for taxation purposes?

2.   ls there any limit to the amount which may be claimed as a taxation deduction for any particular item of expenditure or to the total expenses which may be listed under this heading; if so, what are the details?


Mr Harold Holt - The answers to the honorable member's questions are as follows: -

1.   The income tax law authorizes a deduction for expenditure incurred in gaining or producing assessable income, or necessarily incurred in carrying on a business for the purpose of producing assessable income. The deductions do not, however, extend to expenditure of a capital, private, or domestic nature.

2.   The deductions allowable are limited to amounts that satisfy the tests set out in 1.


Mr Ward d asked the Treasurer, upon notice -

1.   Can he say whether the Nestle Company (Australia) Limited earlier this year made a bonus share issue of a face value of £1,250,000 by a revaluation of its assets?

2.   Are these bonus shares exempt from payment of taxation?

3.   If so, what is the reason for the continuation of a system whereby income of this description, obtained without any physical effort on the part of the recipient, is exempt from payment of taxation, whilst all wages and salaries earned from employment are taxable?


Mr Harold Holt - The answer to the honorable member's questions is - 1 to 3. The only information available to me in relation to Nestle Company (Australia) Limited is that which has appeared in the press and I am not aware whether an issue of shares has in fact been made.







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