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Friday, 30 October 1970


Dr Everingham asked the Treasurer, upon notice:

(1)   Has his Department made an appraisal of export prices charged for alumina for the purposes of company tax assessment, considering that the purchasers are mainly foreign firms which own Australian alumina work.

(2)   If so, has this appraisal considered competitive world prices and public incentives provided for Australian production including (a) rail freight and electric power rate concessions, (b) double taxation agreements, (c) caustic soda import duty concessions, (d) harbour dues and (e) land and water rates, etc


Mr Bury - The answer to the honourable member's question is as follows:

(1)   There is a specific provision in the income tax legislation which applies to an Australian business controlled by non-residents. Section 136 of the Income Tax Assessment Act provides that, where it appears to the Commissioner of Taxation that the business produces either no taxable income or less than the amount of taxable income which might be expected to arise from that business, the person carrying on the business in Australia shall be liable to pay income tax on a taxable income of such amount of the total receipts of the business as the Commissioner determines. In the case of a business which sells alumina overseas, the export price charged would beone of the factors taken into account in determining whether section 136 is applicable.

(2)   In a section 136 situation, regard would be had to world prices in determining the taxable income that might have been derived by an Australian business if its sales were made on an arm's length basis. The various double taxation agreements entered into by Australia do not operate to inhibit the powers of the Commissioner to apply section 136 in appropriate circumstances. In calculating the taxable income of any taxpayer, deductions are limited to outgoings which are incurred in the derivation of assessable income. Where reductions in rail freight, electricity charges, import duty, harbour dues and land and water rates are provided as incentives for Australian production, only the net payments actually made would be allowed as deductions for income tax purposes.







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