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Wednesday, 2 April 1980
Page: 1328


Senator MISSEN (VICTORIA) - My question is directed to the Minister representing the Treasurer. It relates to the direct tax deductions currently allowed by the Federal Government under the Income Tax Act. Why should union fees be permissible direct tax deductions and not payments to health benefit schemes? Will the Minister inform the Senate which of these two areas the Government considers to be more important to the community? Does the Minister agree that members of the community, and in particular those requiring continual or specialist treatment, are discriminated against as a result of this policy? If so, will consideration be given by the Government to a return to allowing health insurance premiums as a direct tax deduction?


Senator CARRICK - It is true that under current taxation laws union subscriptions, along with contributions by businessmen to associations which carry out business-related activities on members' behalf, are allowable tax deductions, whilst payments to health benefit schemes are not. There is a specific provision allowing deductions to $42 in respect of union subscriptions and contributions to business associations. However, as a matter of principle the tax law allows expenditure incurred in earning assessable income as a tax deduction. The deduction of union subscriptions and contributions to business associations in excess of $42 is a consequence of this principle. This does not necessarily reflect any order of priority on the part of the Government.

It should be borne in mind that the Government already provides a considerable direct financial contribution to the health area. For example, in the last Budget $3.2 billion was provided in that area. This represented some 10 per cent of the total Budget. The treatment of health fund contributions for taxation purposes cannot be seen independently of this very large overall commitment. To make contributions deductible would commit the Government to forgoing revenue of around $500m in a full financial year. This would create considerable difficulties under current economic circumstances.







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