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Monday, 26 November 1973
Page: 3821


Mr CREAN (Melbourne Ports) (Treasurer) - At the beginning I indicate that I will move the amendment to clause 4 of the Bill which has been circulated in my name. There are 6 associated amendments which, with the leave of the Committee, I wish to move at the same time.

The DEPUTY CHAIRMAN (Dr Jenkins)Order! There is too much audible conversation in the chamber. It is quite impossible to hear the Treasurer.


Mr Nixon - Tell him to speak up.


Mr CREAN - If the honourable member would speak down, I would be all right. I repeat that there are 6 associated amendments which, with the leave of the Committee, I wish to move at the same time. The amendments relate to clauses 4, 6, 28, 30, 32, 38 and 39 which read in part as follows: 4. (1) Section 23 of the Principal Act is amended by omitting paragraphs (k),(kaa), (kab), (ka) and (o). 6. (1) Sections 23a and 23c of the Principal Act are repealed.

(2)   The repeals effected by sub-section (1) apply to assessments in respect of income of the year of income that commenced on 1 July 1973 and in respect of income of all subsequent years of income. 28. (1) Section 122G of the Principal Act is amended by omitting sub-section (5).

(2)   The amendment made by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1973 and in respect of income of all subsequent years of income. 30. (1) Section 122p of the Principal Act is repealed.

(2)   The repeal effected by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1973 and in respect of income of all subsequent years of income. 32. (1) Section 128b of the Principal Act is amended by omitting from paragraph(b) of sub-section (3) the words ", or sub-section (2) of section 23c,".

(2)   The amendment made by sub-section (1) applies in relation to dividends paid on or after 22 August 1973 other than dividends declared before that date.

(3)   Where the directors of a company shares in which were listed for quotation in the official list of a stock exchange in Australia or elsewhere recommended before 22 August 1973 the payment of a dividend on any of those shares and a dividend was declared by that company on or after that date in respect of those last-mentioned sharesin accordance with the recommendation, that dividend shall be deemed, for the purposes of sub-section (2), to have been declared before that date. 38. (1) This section applies in relation to so much of the following classes of expenditure of a taxpayer as has not been allowed, and is not allowable, as a deduction in the assessment of the taxpayer in respect of the year of income that ended on 30 June 1973 or an earlier year of income and is not included in the residual capital expenditure of the taxpayer, for the purposes of Division 10 of Part III of the Income Tax Assessment Act 1936-1973, as at the end of that first-mentioned year of income, namely: -

(a)   expenditure on exploration or prospecting for gold on any mining tenements in Australia or Papua New Guinea incurred by the taxpayer during the period from the commencement of the year of income that began on 1 July 1963 to the end of the year of income that ended on 30 June 1973;

(b)   expenditure in connexion with mining operations in relation to gold, or gold and copper, incurred by the taxpayer during the period from the commencement of the year of income that began on 1 July 1963 to and including 9 May 1968 or incurred by the taxpayer after that period in accordance with a contract made during that period for the acquisition of property by, or the performance of work for, the taxpayer, being expenditure that would have been of the kind referred to in sub-section 122 (1) of the Income Tax Assessment Act 1936- 1967 if the exemption provided by paragraph 23 (o) of that Act had not been provided; and

(c)   expenditure (not being expenditure that is referred to in paragraph (b)) in connexion with mining operations in relation to gold, or gold and copper, incurred by the taxpayer during the period from and including 10 May 1968 to the end of the year of income that ended on 30 June 1973, being expenditure that would have been allowable capital expenditure within the meaning of Division 10 of Fart III of the Income Tax Assessment Act 1936-1973 if the exemption provided by paragraph 23 (o) of that Act had not been provided.

(2)   Where the amount of the expenditure to which this section applies exceeds the net exempt income from gold derived by the taxpayer during the period from the commencement of the year of income that began on 1 July 1963 to the end of the year of income that ended on 30 June 1973, then the amount of the excess, to the extent that it exceeds any unrecouped loss from gold incurred by the taxpayer during that period, shall, for the purposes of the Income Tax Assessment Act 1936-1973, other than Sections 122e, 122f and 122h of that Act, be deemed to be allowable capital expenditure, within the meaning of section 122a of that Act, incurred by the taxpayer in the first year of income after the year of income that ended on 30 June 1973 in which the taxpayer carries on prescribed mining operations as defined by section 122 of that Act.

(3)   For the purposes of sub-section (2) -

(a)   " net exempt income from gold " means the income derived by the taxpayer that is or was exempt from income tax by virtue of paragraph 23 (o) of the Income Tax Assessment Act 1936-1963, or of that Act as amended at any time, less any expenditure that would have been or would be allowable (in addition to any deduction that was or is allowable) as a deduction, other than a deduction under Division 10 of Part III of that Act, or of that Act as amended, if the exempt income had been assessable income; and

(b)   " unrecouped loss from gold " means so much of any loss incurred in a year of income by the taxpayer in carrying on a business the income from which, if any, would have been exempt from income tax by virtue of paragraph 23 (o) of the Income Tax Assessment Act 1936-1963, or of that Act as amended at any time, that has been allowed or is allowable as a deduction under section 77 of that Act, or of that Act as amended, as exceeds the profits that have been or are to be included under sub-section (3) of that section in the assessable income of the taxpayer of any year of income in respect of that deduction.

(4)   The value of trading stock to be taken into account at the end of the year of income that ended on 30 June 1973 shall, for the purpose of determining the net exempt income from gold derived by the taxpayer during the period referred to in subsection (2), be ascertained in accordance with subsection 31 (1) of the Income Tax Assessment Act 1936-1973 and, notwithstanding the provisions of section 29 of that Act, the value as so ascertained shall, for the purpose of the application of section 28 of that Act, be taken into account as the value of trading stock on hand at the beginning of the year of income that commenced on 1 July 1973,

(5)   For the purposes of section 122k of the Income Tax Assessment Act 1936-1973, the cost of a unit of property in respect of which expenditure to which sub-section (1) of this section applies was incurred shall be deemed to be so much of that expenditure as is included in the allowable capital expenditure in accordance with sub-section (2).

39.   Where an amount that is included in the assessable income of a taxpayer of the year of income that commenced on 1 July 1973 or a part of such an amount would, if the amendments made by sections 6 and 28 had not been made, be deemed to be assessable income to which section 23a of the Principal Act would apply, then, notwithstanding those amendments, section 23a and sub-section 122g (5) of the Principal Act continue in force for the purpose of applying in relation to that amount or that part of that amount.

The provisions that I propose to be omitted from the Bill would, with effect from the commencement of the 1973-74 income year, have withdrawn the outright exemption from income tax of profits earned from mining for gold in Australia and Papua New Guinea and the exemption of one-fifth of the profits earned from mining prescribed metals or minerals. Profits derived from these activities in 1973-74 and future years would then have been subject to income tax in the same way as profits from other mining operations. The Government has decided not to proceed with these clauses of the Bill. It has in mind that further action be deferred at least until the end of the 1973-74 income year. In the interim, an investigation will be made of representations received as to the effects that elimination of the exemptions might have upon people who are dependent on the mining industry for their livelihood. I commend the amendments to the Committee. I move:

(1)   In clause 4, omit from sub-clause (1) " paragraphs (k), (kaa), (kab), (ka) and (o) ", substitute " paragraphs (k), (kaa), (kab) and (ka) ".

(2)   Omit clauses 6, 28, 30, 32, 38 and 39.

The DEPUTY CHAIRMAN- Is it the wish of the Committee to consider the amendments together? There being no objection, that course will be followed. The question is That the amendments be agreed to'.







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