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Wednesday, 6 August 1930

Senator DALY (South Australia) (Vice-President of the Executive Council) . - I move-

That proposed new sub-section (1.), paragraph (a), be left out with a view to insert in lieu thereof the following: - " (1.) Where a loss is made in any year by any person -

(a)   in carrying on a business in Australia ;

(b)   if he is a resident, in carrying on a business the proceeds of which (if any) derived from sources outside Australia would not be wholly exempt from income tax under the provisions of sub-paragraph (i) of paragraph (q) of sub-section (1.) of section fourteen of this act; or

(c)   upon the sale of any property the profits (if any) from the sale of which would have been assessable as income of that person, that person shall be entitled to a deduction of that loss from the net assessable income (if any) derived by him in that year."

The proposed new sub-section differs from that in the bill as printed in paragraph c only. The balance of the subsection is the same as appears in the bill except that the bill does not show the terms paragraphed into a and b. It is considered desirable to have the matter set out in paragraphs on account of the length of the text, and also, because three different subjects are mentioned. The purport of paragraphs a and b is explained in the printed explanatory notes, which have been issued. Paragraph c is inserted, because profit from isolated sales of property which had been acquired for re-sale at a profit is now to be treated as taxable income. Conversely a loss resulting from a similar operation should be treated as a loss to be deducted from assessable income, if any, of the taxpayer in the same year, or in the absence of such income, then as a loss to be carried forward into succeeding years to be deducted from the profits of those years as far as may be necessary to extinguish the loss within the four years next succeeding the year in which it is sustained. It has been the depart mental practice to allow a deduction of those losses in all past assessments, but it is considered desirable to have statutory authority for the practice, having regard to the fact that isolated transactions yielding taxable profit may not, in some cases, be classifiable strictly as businesses. Section 26 of the principal act in its present form allows deduction in respect of losses in businesses only.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 15 -

After section twenty-eight of the principal act the following sections are inserted: - " 28a. (3.) For the purposes of this section foreign company ' means a company in corporated outside Australia."

Senator Sir GEORGEPEARCE (Western Australia) [9.33]. - I am glad to see this provision in the bill because it is an indication, although somewhat late, of repentance on the part of this Government and its supporters, and a tardy recognition of the contention of the previous Administration that the American film industry, which is extracting such a huge sum of money from the Australian public, should contribute to the revenue of the country. We all recall the fierce election battle over this issue during the last campaign, and the allegations made by Labour candidates that the Bruce-Page Administration intended to tax the people's amusements. I do not know if you, Mr. Chairman, would rule the amendment out of order, but I should like to submit one, which I consider is amply justified. Sub-section 1 of proposed new section 28a reads -

Notwithstanding anything contained in this act, where any person residing outside Australia or any foreign company derives income under any contract or agreement with any person in relation to the carrying on in Australia by that person of a business of distributing, exhibiting or exploiting motion picture films. . . .

Then the section goes on to state that the foreign company shall be assessable and charged with income tax on its profits. I should like to alter the sub-section to read -

Notwithstanding anything contained in this act, or any promise made by the Labour party at the recent elections, or of any undertaking given by it to thu picture interests that no taxation would be levied upon the industry-

The CHAIRMAN (Senator Plain).The honorable senator is out of order.

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