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Wednesday, 4 December 1974
Page: 3138

Senator GREENWOOD (Victoria) -I rise to speak in this debate on the Income Tax Bill because there is one matter to which some attention has been given in recent times but which has not been adverted to in this Senate, and that is the attitude being adopted by the Commissioner of Taxation to donations being made to the John Curtin House Appeal. What is the John Curtin House Appeal? It is an appeal designed to establish a headquarters for the Australian Labor Party in Canberra. I understand it is an appeal which seeks to raise some millions of dollars because the Labor Party desires to have the most expensive, the most ambitious and the most extravagant building in Canberra. It will not only be a headquarters for the Labor Party in the sense that it incorporates its offices and houses its office bearers; it will be a building which also will provide a revenue because the greater part of it will be let to government departments. The rental paid by government departments will augment the income of the Australian Labor Party. In short, this is a very attractive device whereby the Australian Labor Party will be able to get some money from Consolidated Revenue, from the taxpayers funds, which will help Labor's purposes.

If we in the Senate are becoming accustomed to this misuse of public moneys to advantage the Australian Labor Party, I think we ought to use every opportunity to inform the Australian people of the way in which this is being done. The John Curtin House appeal is an Australian Labor Party appeal. It has been supported by a number of business men and publicity has been given by the organs of the media which support the Australian Labor Party of the fact that business men are supporting the appeal. It has been suggested in some places that the business men supporting this appeal have been pressured in various ways by the Australian Labor Party because it is in government. The most striking indication of how the position of power is being used to help the appeal for John Curtin House is illustrated by a letter written by the First Assistant Commissioner of Taxation to the Secretary of the John Curtin House appeal. That letter indicates that if certain contributions are readily made they are a tax deduction and in those circumstances the donors will be able to regard them as a deduction from their taxable incomes.

This concept that people may make contributions to a desirable appeal and be able to claim them as a deduction from their income tax is well established in this country. We know that if people make a contribution to a charitable appeal, whether it be $2, $4 or $10, they are allowed to put it in their income tax returns as a deduction. If a business makes a contribution of $ 100, $500 or $ 1000 to a desirable appeal it is allowed to claim that sum as a deduction. This is a tactic which all governments will adopt in order to promote desirable appeals. In section 78 of the Income Tax Act, a section running into some 4 pages, there is a list of all the appeals which are regarded as proper appeals for which contributions made are allowed as a tax deduction. That is proper, because everyone knows what the objectives of the contributions are and it is all clear and above board. But the name of the Australian Labor Party does not appear in this list.

Senator Wriedt - I rise on a point of order. I draw to the attention of the Senate standing order No. 419, which is quite clear in its intent. The matters being discussed by Senator Greenwood are not relevant to the subject matter of the Bill and I seek your ruling on that, Mr Deputy President.

The DEPUTY PRESIDENT (Senator Webster)- The honourable senator is discussing a matter relating to income tax and, as I see it, he is not relating his remarks directly to the Bill before the Senate. I would ask him to connect his remarks to that Bill.

Senator GREENWOOD - Thank you, Mr Deputy President. The rate of income tax must surely relate to the purposes for which the revenue which is collected by the income tax is going to be expended, and that aspect bears upon what are the deductions which may be allowed. That is the way I am seeking to put what I am now arguing. When one looks at the objectives for which contributions may be made and for which deductions from assessable income of those contributions may be allowed, one does not find either the John Curtin House Appeal or the Australian Labor Party or any political party or any political party's objective as one of the allowable deductions. Therefore, why is it that in this particular case the First Assistant Commissioner of Taxation is indicating that in regard to contributions to the John Curtin House Appeal donations made by large business organisations will virtually automatically be allowed as a deduction.

I have here a letter from Mr J. W. Curtin, the First Assistant Commissioner of Taxation- who coincidentally I understand is related to the late John Curtin- addressed to Mr T. Kavanagh, Secretary of the John Curtin House Appeal, Civic Square, Canberra City. It is headed 'Income Tax: John Curtin House Appeal'. The second paragraph of the letter reads:

Under the provisions of section 5 1 of the Income Assessment Act, deductions are allowed for outgoings incurred in producing assessable income or which are necessarily incurred in carrying on a business for that purpose, except to the extent to which the outgoings are of a capital, private or domestic nature. The question whether a gift made to the Appeal would qualify for deduction under this provision is a matter which can be determined only in the light ofthe facts of each particular case. It is accordingly not practicable to indicate in advance any ruling which would be capable of general application.

To any person who is versed in the intricacies of income tax law or income tax practice, the enormity of what is being offered in the next paragraph, which is the significant one, becomes readily apparent. It states:

It is recognised, of course, that large business organisations often make donations as a form of advertising and, in this situation, deductions would ordinarily be allowable in terms of section 51.

I stop there. If firms such as Myers or Broken Hill Pty Co. or Dunlop or Hamersley or anyone of the big companies in this country were to make a donation to a heart disease appeal or to a public benevolent institution or to flood relief in Queensland or to any other ideal objective which was regarded as proper under section 78, that organisation could claim as a deduction from its income tax the money which was donated. That is well recognised and it is justified by the Commissioner of Taxation because it is said that if Myers, for example, is shown publicly to have made a donation to a worthy cause then in the public mind that helps Myers and that, in very real measure, is why a view of the Commissioner of Taxation, the connection is readily established, and so it is with any large organisation making an appeal.

Having said that, let me go on to the next paragraph of the First Assistant Commissioner's letter to the Secretary of the John Curtin House Appeal. It states:

In view ofthe widespread publicity which it is proposed to give to donors, it is thought that taxpayers carrying on business operations would have little difficulty in establishing that the gifts were made solely for business purposes and would qualify as allowable income tax deductions.

Why would a taxpayer making a donation to the John Curtin House Appeal have little difficulty in establishing that the gift was for business purposes? Why? Is it to be said that if anyone makes a donation to a Labor Party appeal, in the estimation of the public that has the same character as a donation made to a desirable public objective. Is that what the First Assistant Commissioner is saying? We are not told, and I believe that what is contained in this letter as a statement of the First Assistant Commissioner of Taxation warrants the closest scrutiny, the closest investigation, because I believe that implicit in the letter, if it is carried out, is a dereliction of duty on the part of the Commissioner of Taxation, and I will assert that proposition both inside and outside that chamber.

Senator McLaren - Why did you not assert it a few years ago? You overlooked it then.

Senator GREENWOOD - I simply say that no such letter or no such attitude, as I am informed, was adopted with regard to any other appeal which was instituted in the past. I know that the Liberal Party has a humble building- it is a nice building, but it is a humble building- here in Canberra which was constructed from donations tediously and painfully and over a long period extracted from generous people throughout this country, and they did not get a cent in tax deduction for the moneys which they put in, and the Labor Party is prepared to -

Senator Gietzelt - What about the handouts your Government gave to big business.

Senator McLaren - Have you seen their assessment? You never saw it.

Senator Gietzelt - Taxpayers' money is going to subsidise big pastoral companies.

Senator GREENWOOD -Mr Deputy President,is it a fact that I have touched members of the Labor Party on the raw? Is that the reason why Senator Gietzelt is getting red in the face and is interjecting so furiously? Does he recognise the force of the argument I am raising? Is there any reason why Senator Milliner is getting up and Senator McLaren is shrieking.

Senator McLaren - You are not answering in relation to the Taxation Office.

Senator Wheeldon - Where are all the Liberals? You have driven the Liberal Party out of the Senate.

Senator GREENWOOD - Senator Wheeldonseems to have been upset. Mr Deputy President, the noise is incessant. Is there a guilty conscience amongst the Labor senators because they recognise the force of the arguments which are being raised?

Senator Gietzelt - No guilty conscience at all.

Senator GREENWOOD - I simply ask these questions and maybe if the indignation of the Labor senators can subside they might attempt to give an intelligent answer. It is very interesting to see the indignation of the Labor senators. (Government senators interjecting)

Senator Jessop - A point of order, Mr Deputy Speaker. I find it quite impossible to hear what Senator Greenwood has to say because of the disorderly interjections of the Government senators and I ask that you pay regard to that.

The DEPUTY PRESIDENT- The point of order is upheld. I would ask honourable senators to give the speaker, Senator Greenwood, silence.

Senator GREENWOOD - I thank you, Mr Deputy President. I simply say: How can a contribution to a political party- to any political party- be regarded as a tax deduction simply because it is said to be incurred necessarily for the purposes of acquiring income.

Senator Milliner - You tell us.

Senator GREENWOOD -But that is the real point. Is it to be said by the Labor Party that by donating to the Labor Party appeals a person will help his position in the community? Is it to be said by the Labor Party: 'If you help us we will help you"? If that is the argument which the Labor Party is raising, it is corruption of the very worst character. How can it be said in any way that giving a donation to a Labor Party appeal is to be regarded as producing assessable income? Is this in some way an indication that the Labor Party helps those who are prepared to give donations to it? How can it be said in any shape or form that a donation to the Labor Party is necessarily incurred in carrying on a business? Section 5 1 of the Income Tax Assessment Act, under which business expenses are allowable, is in these terms:

All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions except to the extent to which they are losses or outgoings of capital, or of a capital, private or domestic nature, or are incurred in relation to the gaining or production of exempt income.

So either the Labor Party is claiming that it is necessary in the production of assessable income or necessary for the incurring of income to make this donation to the Labor Party, or the Commissioner is interpreting that provision in a way that facilitates the Labor Party's purposes. A donation can only be said to be incurred in producing assessable income or in carrying on the business if such donation to the Labor Party is said to be necessary for that purpose. It is absolutely scandalous if it is put in that way. The Australian Labor Party has used its powers and its patronage in a host of areas, such as the way in which Mr Clyde Cameron, as the Minister for Labor and Immigration, dispenses 6 months previous average weekly earnings to some people who are put out of work, in the way in which it can be used through the Australian Assistance Plan -

Senator Wheeldon - I am rising on a point of order, Mr Deputy President. This tirade of Senator Greenwood's is now departing completely from the Bill which is before the Senate. The matter he is raising now has absolutely no relevance whatsoever to an Income Tax Bill.

The DEPUTY PRESIDENT- The matter to which Senator Greenwood is speaking is related to income tax. In debates on tax matters in this chamber the range of subjects covered is generally fairly wide. Senator Greenwood is speaking directly to an income tax matter.

Senator GREENWOOD - I was saying that the use by this Labor Government of the power of patronage is well known in the area of activities of the Minister for Labor and Immigration; it is known in the area of the Minister for Social Security (Mr Hayden); and it is known in the area of the Minister for Urban and Regional Development (Mr Uren). In the areas of these Ministers money is used for purposes which the Labor Party regards as desirable and it is hoped thereby to buy votes. This is just another example in a slightly different vein of the way in which the income tax power is apparently being used by the Taxation Commissioner to facilitate donations to the Labor Party headquarters appeal in this city. He has made a statement that deductions will be allowed simply because donors will have no difficulty in establishing that it is a business expense. It is that aspect, that they will have no difficulty in establishing that it is a business expense, which to me warrants the closest scrutiny.

I believe that the statement contained in the letter of the First Assistant Commissioner is an indication that the Commissioner is not prepared to carry out the discretion which is conferred upon him under the legislation. It is the Commissioner's duty to assess whether or not an expense, a deduction claimed by a taxpayer is or is not a business expense. If he is prepared to say in advance, as he does say, that it is thought that taxpayers carrying on business operations would have little difficulty in establishing that the gifts were made solely for business purposes and would qualify as allowable income tax deduction, it is to say in advance that the discretion conferred upon him is not going to be exercised. He is not saying that it applies to taxpayers carrying on a business; he is simply saying that it is taxpayers, and a taxpayer could be an individual who simply has a large income and pays money because he derives his income from shares, dividends or earnings which are not related to the carrying on of a business. If the First Assistant Commissioner claims that those sorts of taxpayers will have no difficulty in establishing that the gifts were made solely for business purposes just because they were so made, I believe he is not having regard to section 5 1 of the Act.

If the Parliament is not the place in which these allegations can be raised when a letter of this character comes to public light, then where can the people be protected from abuse of power? I believe that what the Treasurer (Mr Crean) has said and what other people have failed to say demonstrates the real problems which this situation is creating. The Commissioner cannot be doing his duty if he is taking an attitude which is so wide and which is so misleading. How can he say in advance that people are going to have little difficulty in establishing that it is a deduction which is a business expense and therefore allowable? Surely every particular case must be examined in the light of whether or not it is a proper deduction, and I think it is high time that the people of this country became aware ofthe shabby sort of government we have got and the way in which its own attitudes and dictrines and its own corruption extends to the officers for whom it is responsible. This is a letter which I believe any taxation commissioner could not sustain if it was sought to be justified publicly.

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