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Thursday, 26 September 1974
Page: 1438

Senator WEBSTER (VICTORIA) -Is the Minister representing the Treasurer aware that the Government has in the present Budget substantially increased the rate of company taxation on private companies? Is the Minister aware that the prime tax rate for public companies and for private companies is now at the same level of approximately 47 Vi per cent? Is he also aware that the smaller proprietary limited company is forced under the threat of further heavy taxation to distribute or disgorge at least 50 per cent of the profit that it retains after tax and that this requirement does not apply to public companies? It applies only to the smaller companies which I imagine, the community would wish to encourage so that they may build strength and reserves against the thrust and competition from the larger and more financially sound public companies. Would the Government consider either reducing the forced distribution of profit by private companies or at least placing both kinds of companies on the same basis, now that they are taxed at the same rate?

Senator WRIEDT -The Treasurer has in fact announced that the taxation rate for private companies now will be the same as applies to public companies. It is my understanding that the reason for this is that certain escape clauses have existed by means of which individuals within private companies have got around paying the higher rates of personal income tax which are higher than the company rates. Obviously, retained profits could be kept within the private company and paid for at the lower rate. It is my understanding that this is the reason for the Government's decision to take this step which was, of course, announced in the last Budget. I assume that Senator Webster, when he used the word 'reducing', meant reducing the 50 per cent requirement of distribution of profits. I would have to refer that matter to the Treasurer. I think it is well known that a public company has a much wider consideration in distributing profits than a private company has. More people are involved and the taxation benefits which have accrued or which have been used by people in private companies are not available to shareholders of a public company. I cannot say whether the Treasurer would consider altering the 50 per cent rate, and I will have to refer the matter to him.

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