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Thursday, 2 November 1967

Mr PETERS (Scullin) - First 1 want to protest at the method by which honourable members are called upon to speak in this debate. I rose immediately after the Minister but was not called. Three honourable members from one side of the chamber were called but only one from the other side. I rise in order to draw attention to the Minister's statement that because of the taxation payable it is inadvisable to increase the amount of royalties on oil secured as a result of the operations of oil companies off the coast of Australia. The Attorney-General (Mr Bowen) mentioned the withholding tax. As honourable members are aware, the Esso company is an American, company. As that nation operates a double taxation agreement with Australia, I want to know whether - after the payment of company tax and royalty, which will be equally payable by Australian and overseas companies - the taxation on the declared dividends will operate in accordance with the principles of the double taxation agreement. If that happens, the shareholders in nonAustralian companies will pay a 15% withholding tax and the Australian investor in the Broken Hill Proprietary Co. Ltd will pay the ordinary tax of between 20% and 66%. In other words on a dividend of $lm, the taxation payable by the United States company to Australia would be $150,000, but the BHP shareholders could ' pay up to $600,000 in taxation to the Australian Government. This means that the bigger the share of the continental shelf, with its reservoirs of gas and oil, that is in the control of overseas companies with headquarters in countries that have a double taxation agreement with Australia, the less, relatively, the Australian Government will receive in taxation on dividends. This will promote overseas investment, and overseas companies will control more and more of the continental shelf and more and more of Australia's offshore gas and oil. For this reason, if for no other reason, this amendment and other similar amendments should be included in this legislation in order that overeas investors will contribute relatively as much to the Australian Government in the form of taxation as the shareholders within this country contribute. 1 suggest' that there should be a careful examination of the amounts of company taxation, royalties and dividend taxation that will ultimately come to the Australian Government from, on the one hand, overseas companies and their shareholders and, on the other hand, Australian domiciled companies and their shareholders. If, as I say, the withholding tax in the case, of the United States of America is 15%, then the amount' of taxation that will be received by the Australian Government as a result of the operation of overseas oil companies will not be nearly as great as the amount of taxation coming from those people who are associated with locally based companies such us BHP. I would like the Minister to correct me on that point if 1 am wrong.

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