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Wednesday, 6 August 1930


Senator McLACHLAN (South Australia) .- I move-

That paragraph (a) be left out.

In an appeal case, Gordon v. The Federal Commissioner of Taxation, which came before the High Court of Australia recently, the court held that subscriptions paid to the Graziers Association was a reasonable business outgoing, and should be allowed as a deduction. The provisions contained in paragraph a, which I desire the committee to reject, were inserted to meet the position created by the High Court decision. In some explanatory notes furnished by the Commissioner of Taxation, it is pointed out that expenditure is often incurred for the representation of such associations before the Arbitration Court for the purpose of contesting demands of employees for increased wages, and not for the production of assessable income. I put it to honorable senators that expenditure so incurred is equivalent to expenditure for the production of assessable income. Trading associations are almost essential to the conduct of modern business, which is tending towards collectivism. The activities of such bodies are entirely due to the fact that they contribute something to the carrying on of a business. The provisions in paragraph a are intended to meet a position created by the decision of the High Court in the Gordon case - a decision with which, I suggest, no person with common sense can be in disagreement. The manner in which the proposed new provisions are presented is convincing evidence of the intricacies of income tax legislation generally. I direct attention particularly to the proviso. It states that a person shall be entitled to deduct only

So much of his subscription as bears to the whole of the subscription the same proportion as the losses or outgoings so incurred by the association in carrying out that activity bear to the total losses and outgoings (not being in the nature of losses and outgoings of capital) of the association for that year.

This appears to be another of those income tax assessment curves of the third degree about which we have heard so much in recent years. I submit that subscriptions to any organization necessary to the carrying on of a business are an allowable deduction. The decision of the court is unchallengeable. I therefore ask honorable senators to agree to my amendment and strike out the whole of the paragraph unless the Minister can satisfy the committee that it is desirable to retain the provisions contained in subparagraph iii.

Senator E.B. JOHNSTON (Western Australia [8.28]. - I support the amendment. The new provisions have been inserted by the department for the purpose of upsetting the decision of the High Court in an appeal by the Commissioner against a decision of the Supreme Court of New South Wales. In that case a pastoralist named Gordon appealed against the decision of the Commissioner of Taxation who disallowed as a deduc tion the amount paid in membership subscription to the Graziers Association of New South Wales. Three judges of the High Court, including Mr. Justice Isaacs, upheld the decision of the Supreme Court of New South Wales. The Graziers Association has spent a considerable amount of time and money in contesting in a constitutional manner the decisions of the Commissioner of Taxation. The association contended that the expenditure in subscriptions was incurred for the protection of assessable income. As such I. submit that it should certainly be allowed. It is extraordinary that since that decision in favour of the members of an association who had banded themselves together for protection, the Government has brought down an amendment designed to defeat a judgment of the High Court. It is also particularly surprising that this action should be taken by a Government which is forcing public servants to join organizations in order to obtain the benefits of awards of the Public Service Arbitrator. Surely if it is right for public servants to join an association in order to protect their interests, it should , also be beneficial for the pastoralists and farmers to join an organization to safeguard their interests. The men on the land .would be in a much worse position than they are to-day if it were not for the work which has been continually carried out by an association of which they are members, particularly in advocating their claims before the Arbitration. Court. The High Court has decided that the subscriptions paid by members of this association are legitimate deductions. Prom- the Government's viewpoint the total revenue involved is infinitesimal, and from the point of view of the men on the land who are members of this association, and who are urged to join it; this privilege is essential. Although workers who do not join a trade union organization are ignored by this Government and its supporters, it has submitted this amendment to discourage another section of the community from joining a legitimate organization established to safeguard the interests of its members. If they do their contributions cannot be deducted from their taxable income. I trust that the amendment moved by Senator McLachlan will be agreed to, as this paragraph has been inserted to defeat, not only a decision of the Supreme Court of New South Wales, but of the High Court of Australia.







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