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Wednesday, 12 September 1973
Page: 931

Dr Klugman (PROSPECT, NEW SOUTH WALES) asked the Treasurer,- upon notice:

(1)   Is the age allowance for taxation purposes intended as compensation for those not eligible for an age pension.

(2)   Is there any other justification for this allowance.

(3)   Will the allowance be removed when the means test is abolished.

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

(1)   No.

(2)   The age allowance was introduced in 1951 following a recommendation of the Commonwealth Committee on Taxation, 1950-1951, for the specific purpose of removing an anomaly then existing in the taxation treatment of two groups of aged persons - those, on the one hand, in receipt of full pension and the maximum permissible income under the means test, who paid no tax, and those on the other hand, who, because of the means test, were entitled to only part pension or no pension at all, and who were liable to tax even though their total income might have been no greater than that of full-rate pensioners.

The anomaly which existed prior to 1951 arose from the interaction of the non-tapered means test then applicable and the conditions of entitlement to the pension and the fact that the pensions were free of tax. With the introduction of the tapered means test in 1969, the anomaly which had existed prior to 1951 would have ceased to exist even if the age allowance provisions had been wholly withdrawn. The rationale of the allowance disappeared in 1969 because it would no longer have been possible for a person not in receipt of a full age pension (because his other income exceeded the maximum permissible income) to be worse off after tax than a person) with a full age pension and maximum permissible income.

(3)   As- announced in my Budget Speech, the allowance is being abolished with effect from the beginning of the present income year, as one of a package of measures associated with the abolition of the means test. .

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