Explanatory Memorandum
(Circulated by authority of the Treasurer, the Rt. Hon. William McMahon.)Introductory Note
The purpose of this memorandum is to explain the provisions of five Bills concerning taxation. Three of the Bills relate to income tax, one to estate duty and the fifth to pay-roll tax.
The first Bill - the Income Tax Bill 1966
The first Bill - the Income Tax Bill 1966 will declare the ordinary rates of income tax payable by individuals and companies for the current financial year 1966-67. Features of the Bill are :
Rates of Tax (Clauses 6 and 9).
- With one exception relating to certain primary producers, the rates of tax applicable for the 1966-67 financial year (including the 2 1/2% additional levy payable by individuals) are to be the same as those that applied for the preceding year 1965-66.
Rates of Tax Payable by Certain Primary Producers (Clause 6(2.).
The income limits for the application of the averaging provisions applicable to primary producers are to be raised from $8,000 to $16,000 with a consequent reduction in the rate of tax payable by some primary producers.
The exemption level for persons qualified by age - 65 years for men and 60 years for women - will be increased from $1872 to $1950 for taxpayers assessed under the married couple provisions and from $988 to $1040 for other aged taxpayers.
More detailed explanations will be found at pages 5 to 6 of this memorandum.
The second Bill - the Income Tax (Partnerships and Trusts) Bill 1966
The second Bill - the Income Tax (Partnerships and Trusts) Bill 1966 will declare the special rates of tax payable by certain trustees, partners and superannuation funds for the 1966-67 financial year. These rates are unchanged from those that applied for the 1965-66 financial year.
More detailed explanations will be found at pages 5 to 6 of this memorandum.
The third Bill - the Income Tax Assessment Bill 1966 -
The third Bill - the Income Tax Assessment Bill 1966 - is designed to give effect to proposals amending the basis upon which tax is assessed. In broad terms, the main points of this Bill are :
Double Wool Clips in 1964-65 and 1965-66 income years (Clause 4).
A woolgrower whose assessable income of the 1965-66 income year includes the proceeds of two wool clips may, where the inclusion of the proceeds of the additional clip was due to an advanced shearing by reason of the drought, elect to transfer the proceeds of the additional clip, less shearing and other direct expenses, to the 1966-67 income year.
Disposal of Livestock (Clause 5).
The right of a primary producer to elect that the net proceeds of forced sales of livestock in consequence of drought, fire or flood be taxed over five years if the proceeds are used principally to purchase replacement stock is to be extended to cases in which the proceeds are used principally to maintain breeding stock for restocking purposes.
Erection of Fences to Combat Soil Erosion (Clause 7).
Expenditure incurred in the erection of fences to exclude stock from areas affected by soil erosion for the purposes of combating the erosion and reclaiming the areas is to be deductible in the year in which the expenditure is incurred.
Losses of Previous Years Incurred in Engaging in Primary Production (Clauses 9, 10, 19 and 21).
The limit of seven years on the carry-forward period for deduction of prior year losses is to be removed in respect of losses incurred during the 1957-58 income year and subsequent years in carrying on primary production.
Averaging of Incomes (Clauses 12 and 13).
A primary producer who has elected to withdraw from the averaging system in the 1965-66 income year or a previous year may elect in respect of any of the income years 1966-67 to 1969-70 inclusive to have the averaging provisions applied in his assessments. The increased income limits of $16,000 for the application of the averaging provisions will not be applied in the assessment of a primary producer who has not previously withdrawn from the averaging system until those limits operate to the advantage of the primary producer.
Deductions are to be allowable for gifts of $2 and upwards to the Australian Council of National Trusts, the Australian Conservation Foundation Incorporated and prescribed institutions of advanced education where the gifts are for purposes that are certified as relating to tertiary education activities of the institution.
Payment of Tax to have Priority in Case of Liquidation (Clause 17).
The provisions granting priority for the payment of income tax in the event of bankruptcy are to be modified in the light of relevant provisions of the bankruptcy law relating to priority payments.
More detailed explanations will be found at pages 7 to 32 of this memorandum.
The fourth Bill - the Estate Duty Assessment Bill 1966 -
The fourth Bill - the Estate Duty Assessment Bill 1966 - will exempt from estate duty gifts to the Australian Council of National Trusts and the National Trusts of Queensland, Western Australia and Tasmania.
More detailed explanations are at page 33 of this memorandum.
The fifth Bill - the Pay-roll Tax Assessment Bill 1966 -
The fifth Bill - the Pay-roll Tax Assessment Bill 1966 - is designed to implement two proposals. These are :
Exemption of Certain Schools from Pay-roll Tax (Clause 3).
Salaries and wages paid by non-Government schools providing education at or below, but not above, the level of secondary education are to be exempted from pay-roll tax if the schools are conducted by organisations not carried on for the profit or gain of members.
Rebates in Relation to Exports (Clause 4).
Recoveries in the sale price of goods of excise duty and sales tax paid by an exporter in respect of the goods are to be excluded from the "gross receipts" of the exporter for the purposes of calculating the rebate of pay-roll tax related to increased exports.
More detailed explanations are at pages 34 to 36 of this memorandum.