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Wednesday, 12 December 1973
Page: 2729

Senator WILLESEE (Western AustraliaMinister for Foreign Affairs) - I move:

That the Bill be now read a second time.

The purpose of this measure is to place beyond legal doubt the arrangements for taxation screening of applications to the exchange control authorities in relation to transactions involving tax havens. Screening arrangements of this kind were first approved by the previous Government when last year it relaxed the conditions for portfolio investment overseas by Australian residents. Although the fact was not publicised at the time, the relaxation was on terms that approval to a proposed investment would be withheld if it involved tax avoidance or evasion. More recently, and as announced in a statement made on 25 October 1973 by the Treasurer (Mr Crean) the screening arrangements have been applied at his direction to the whole range of transactions with persons in the New Hebrides. The consequence is that requisite exchange control approval may be withheld if the Reserve Bank does not sight evidence that, in effect, the Commissioner of Taxation is satisfied that the transaction does not in any way involve or assist or would be associated with avoidance or evasion of Australian tax, whether by the applicant or anybody else.

The view has now been expressed in some quarters that there is not adequate legal backing for these arrangements. It is not conceded that there is an absence of legal authority, but the Government feels that in a matter as important as this there ought not be any avoidable uncertainty as to the legal efficacy of the screening procedures. While that is our direct objective in this measure, its introduction also serves as another expression of our determination to stamp out tax avoidance practices whenever we are able to do so. Accordingly, this Bill proposes to insert in section 39 of the Banking Act provisions that will be effective from the date on which the Treasurer announced the taxation screening procedures. The Bill declares that the power of the Reserve Bank over exchange control applications is to be taken as including authority to decline approval if the transaction involves avoidance or evasion of Australian tax. The Bank will not refuse approval on these grounds once a person has obtained the clearance of the Taxation Office.

Honourable senators, will know from comments that have been made on more than one occasion how the Government feels about tax havens and the resort that people and companies make to them. I think it is reprehensible that this kind of activity, which strikes at the foundations of organised society, should go on. In the knowledge that all honourable senators share a desire to counter tax haven activity I confidently ask for a speedy passage for this Bill. I mention that work is proceeding on amendments to the taxation law also, designed to curb resort to tax haven arrangements. I commend the Bill to the Senate.

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