HOUSE OF REPRESENTATIVES.
INCOME TAX ASSESSMENT BILL ( NO. 3) 1967." L'> R
NOTES FOR THE MINISTER'S SECOND READING SPEECH.
This Bill will give effect to proposals outlined in the
Budget Speech. The proposal affecting most taxpayers is, of course, the
increase of $ 26 in the amounts of the concessional deductions
allowable for maintenance of dependants. The increase is to apply
over the full range of dependants for whom concessional deductions
are provided. The deductions for a spouse, a daughter-housekeeper,
an invalid relative and a parent will each be increased from $ 286 to
$ 312, for a student child under 21 years of age and one child under
16 years of age the increase will be from $ 182 to $ 208, and for each
other child under 16 years from $ 130 to " 156. The allowance for a
housekeeper is also to be increased from $ 286 to $ 312.
Another concessionaj deduction for which an increase is
proposed is the allowance for payments by a taxpayer to provide
superannuation or insu-rance cover for himself and his family. The
present limit of 8OO on the maximum deduction allowable each year
is to be increased to l, 2OO.
These increases in the concessional deductions will apply
in assessments for the 1967-68 income year and subsequent years.
For salary and wage earners, the benefits from the increased
dependants' allowances will be reflected in reduced tax instalment
deductions to become operative from 1st October next.
The remaining amendmients proposed by the Bill apply to
primary producers. In 1965 and again in 1966 the Government introduced
temporary measures to assist woolgrowers who, because of the drought,
advanced shearing dates during the 1964-65 and the 1965-66 income
years. When this occurred the proceeds of two wool clips would have
been brought to account for taxation purposes in the one year.
Provision was, therefore, made for these woolgrowers to elect to
transfer the net proceeds of the second clip to the succeeding
income year, so that the proceeds were taxed in the year in which,
in ordinary circumstances, they would have been received.
It is proposed to continue the operation of-these provisions
for the 1966-67 income year and subsequent years, and to extend them
also to advanced shearings brought about by fire or flood.
Another amendment proposed by the Bill will apply to
primary producers who, because of drought, fire or flood, are
forced to sell livestock. The present law enables a primary
producer forced to sell stock in these circumstances to elect to
have the profits of the sale taxed over a period of five years,
if he -uses the proceeds of the sale principally for the purpose
of re-stocking.
2-
The Bill proposes an alternative m-ethod of bringing the
profits of a forced sale to accounit for income tax purposes. In
very general terms, a primary producer who uses the proceeds of
the sale principally for re-stocking may, in respect of sales made
in 1967-68 or a subsequent income year, elect to have the profit
on the sale applied to reduce the cost for income * tax purposes of
stock purchased to replace the stock sold. The effect of an
election will be to defer payment of tax on -the proceeds of the
forced sale until replacement stock purchased is sold in the normal
course of carrying on business.
In some cases stock may be replaced by breeding up a new
flock or herd, instead of buying animals. When this is the case,
a primary producer may specify an amount of the profit of the
forced sale to be included in his assessable income of the year
in which natural increase is bred.
If, by the end of the fifth year after the year in which
the forced sale occurred, any amounit of the profits of the sale has
not been applied in either of the ways I have mentioned the amount
will be included in the primary producer's assessable income of
that year. A further proposal relates to the cost of su; bdivisional
fencing constructed on land used in primary production. Atk present,
this fencing is generally subject to depreciation allowances at
the special rate of 20 per cent. It is proposed to permit the cost
of this type of fencing to be wholly deducted in the year in which
it is incurred. Boundary fences or fences around stock-yards are
not included in the scope of this proposal. These will remain
su; bject to depreciation allowances. The amendment will apply to
expenditure incurred on subdivisional fencing during the 1967-68
income year and subsequent years.
The final proposal affecting primary producers is the
continuation, without any limit as to time, of the special 20 per
cent depreciation allowances on plant and structural improvements
used wholly and exclusively for primary production purposes.
A memorandum explaining each clause of the Bill is being
circulated for the information of honourable members and I do not
propose to go into further detail at this stage.
I commend the Bill to the House.