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Thursday, 22 November 1973
Page: 3762

Mr KEATING (Blaxland) - The honourable member for Fisher (Mr Adermann) was less than honest when he said that the Government had promised not to increase taxation. What it promised at the last election was not to increase personal taxation. It did not do so. In honouring that promise this year the Government has had to take other monetary measures which it would not have taken had it increased personal taxation in the last Budget. So to that extent the Government has kept its word and kept faith with the electorate. The Government gave no specific undertakings in regard to company tax and indirect tax. The Opposition has argued since the election that we are living in an inflationary situation at the present time and that we should have increased personal taxation to a level that would have obviated the need for the introduction of other monetary measures during this year. So in honouring our election promise we did not increase personal taxation.

On another score, the Opposition ought to make up its mind about the principles by which it wants to operate. I will deal with the question of taxation on any increment earned from the purchase and sale of property within 12 months. The Deputy Leader of the Opposition (Mr Lynch) said that this was a terrible thing, that in his electorate people were moving in and out of properties within 12 months, that they had to replace their properties and, of course, that they were charged income tax on any increment that they received from the sale of the properties. But that does not happen on a very large scale. It is most unusual for a family to move house within a year, and to do it continually. What was happening was that people were buying homes as a hedge against inflation and as a way of earning money for themselves. They were buying homes and selling them within a year. People like estate agents would see a reasonable cheap house come onto the market. They would grab it themselves, add a bit to the price and sell it again because there was always an enormous demand for housing. Within a year they could sell perhaps one or two homes and not have the profits assessed for income tax purposes. That was happening with a lot of people and it was creating an inflationary situation in housing. So we have said that profits from any property bought and sold within 12 months will be assessable for taxation purposes.

The Opposition, when in government a year previously, adopted a similar principle. It said that the profits from any shares bought and sold within 18 months had to be assessed for taxation purposes. We have applied the same principle. The Opposition cannot apply that principle in one year and then criticise us for adopting a similar principle which provides that profits from a property bought and sold within 12 months are to be assessable for taxation purposes. If a property is bought and sold within 15 months or 2 years, of course, the profit is not assessable for taxation purposes unless the Commissioner of Taxation decides in terms of section 26a of the income tax legislation that the profits are part of the general income earning performance of a family or an individual. If he so decides, the profit from any sale would naturally be assessable for taxation purposes. But that is left to his discretion under section 26a of the Act.

The question with which I want to deal tonight more than with any other is the question of the retention allowance and undistributed profits tax. This arises from the Government's decision to increase primary tax on private companies from42½c in the $1 after $10,000 to 45c in the $1 this year, and to 47½c in the $1 next year, which will bring the rate into line with those paid by public companies. I agree that the rate of primary tax paid by public companies ought to be brought into line with that paid by private companies, but I have reservations about leaving the retention allowance and the undistributed profits tax provision. I have from the CCH Australian Federal Tax Reporter of April 1973 a table which compares the total tax payable for partnerships with 2 partners as against that paid by a company with 2 shareholders. I seek leave to have this table incorporated in Hansard.

Mr SPEAKER - Is leave granted?

Br Forbes- Yes.

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