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Wednesday, 12 April 1972
Page: 1019

Senator Sir KENNETH ANDERSON (New South Wales) (Minister for Health) (5.4) - I move:

That the Bill be now read a second time.

The purpose of this Bill is to give effect to the decision which was announced a few moments ago in this place and which was announced by the Treasurer (Mr Snedden) in the other place last evening to reduce the levy on personal income tax. The cost to revenue of this reduction will be $12m in 1971-72 and $117m in 1972-73. For reasons that have been explained it is proposed that the rate of levy on personal income tax be reduced from 5 per cent to 2½ per cent. New pay-as-you-earn deductions reflecting the lowering of the levy to 2½ per cent from now on are to apply as from the earliest practicable pay-day. As honourable senators will appreciate, the job of printing the deduction scales is a big one, but it has been put under way in order that copies can be distributed quickly. The scales being printed are, in fact, those that applied from 1st October 1970 to 30th September 1971 and many employers will no doubt still have a copy of them available. The Commissioner of Taxation has advised that it will be in order for employers who have a copy to use it straight away. An announcement will be made when the copies now being printed become available at post offices and taxation offices.

In assessing incomes for the 1971-72 financial year it is intended to proceed notionally on the basis that the 5 per cent levy applied for three quarters of the year and a levy of per cent for the last quarter. For assessment purposes the one rate of levy is to be applied and there will be no division or apportionment of 1971- 72 income between quarters. Consequently, the rate of levy to be applied for income year 1971-72 as a whole will be 43/8 per cent.

During the current financial year, taxpayers deriving income from sources other than salary or wages are receiving assessments based on the 1970-71 income year in which provisional tax is levied in respect of the 1971-72 income year at the rates declared by Parliament for that year. The rates now in force include the 5 per cent levy and these rates will continue to be used in assessments that issue before this Bill becomes law. Any overpayment of provisional tax will be adjusted automatically when the provisional tax levied this year is set off against the amount payable in next year's assessment. However, any taxpayer who wishes to have his assessment adjusted in the meantime can make an application to the Taxation Office for variation of provisional tax. He will then need to pay only the reduced amount payable under the new law. If the tax assessed has already been paid, the amount overpaid will be refunded on application to the Taxation Office. While this Bill in effect fixes the levy only for 1971-72, it is the Government's intention that the reduction in the levy will be on-going into 1972-73. As is customary, legislation declaring the 1972-73 rates will be presented during the Budget sittings. A memorandum explaining technical features of the Bill is being made available to honourable senators. I commend the Bill to the Senate. I hope the Bill has as speedy a passage in this place as it had in the other place.

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