Second Reading Speech
Mr. Chifley (Macquarie-Prime Minister and Treasurer) (8.6).-by leave-I move-That the bill be now read a second time.
The principal purpose of this bill is to authorize an important change in the system of crediting employees with the value of certificates and stamps representing tax instalments deducted from their earnings.
Mr. SPEAKER (Hon. J. S. Rosevear). -On the left side of the chamber there is a considerable amount of very provocative discussion going on. Many complaints about this kind of thing have been received from outside listeners. I hope that honorable members will conduct themselves properly.
Mr. Chifley.-In the past, employees were obliged to hold these certificates or stamps for presentation to the Taxation Branch when the annual assessments were issued. Under the changed system the certificates or stamps are forwarded by the employees when lodging their returns of income. Employees who have forwarded certificates or stamps of a value which exceeds the tax payable by them will receive refund cheques for the excess at the same time as they receive notices of assessment. On the other hand, where the value of the certificates or stamps is less than the tax payable, the notices of assessment will set out the balance payable.
The new system presents an immediate advantage to employees in that it enables a more expeditious payment of refunds. Furthermore, the early submission of certificates and stamps to the department considerably reduces the possibility of their loss. The new system will operate in assessments based on the income of the year ended the 30th June, 1947.
The opportunity has also been taken in this bill to effect certain drafting amendments in the other provisions of the division relating to the collection of income tax by instalments. As a consequence of these amendments, the collection of income tax and social services contribution by instalments will be authorized in a single code. Further drafting amendments have the effect of embodying in the act certain provisions of the Income Tax Regulations which relate to the procedure to be followed by employers who are not group employers.
In effecting these amendments it is proposed that the existing division relating to the collection of tax by instalments should be repealed, and a new division inserted in its stead. The new division will not impose any further duties or responsibilities on employers, but will simplify the law for employers and the administration.
Another important amendment simplifies the basis of taxation of members of the defence forces. In January of this year, a special departmental committee was appointed to report on the pay and conditions of service of the post-war defence forces. One recommendation of this committee was to the effect that rations and quarters, whether provided in cash or in kind, should be valued, for taxation purposes, on a uniform basis at the rate of 20s. a week. This recommendation has been adopted. The committee also drew attention to the taxation position of members of the forces serving with the British Commonwealth Occupation Forces in Japan compared with the position of members serving in northern Australia, Papua and New Guinea. As from the 1st July, 1947, personnel serving in the latter areas for at least one-half of the year of income are entitled, in common with civilian taxpayers, to a deduction of Pd120 by way of zone allowance. It will be remembered that these zone allowances are granted in recognition of the disadvantages of uncongenial climatic conditions, isolation and high cost of living found in the remote areas of the Commonwealth. The Government agrees with the committee's view that at least two of those factors are present in Japan. It is therefore proposed that a deduction of up to Pd120 shall be allowed to members of the forces serving at certain overseas localities, including Japan.
Following the enactment of the Pharmaceutical Benefits Act earlier this year, it has been found necessary to examine the question whether income tax should be paid by friendly society dispensaries which are, at present, wholly exempt from tax. The introduction of the free medicine scheme will confer upon many friendly society dispensaries opportunities for trading with the general public which they have not hitherto possessed. It is apparent that, if the income of the dispensaries continues to be exempt from taxation, they will obtain a competitive trading advantage over other pharmacists who participate in the scheme. In order to place friendly society dispensaries and other pharmacists on an equal footing, it is proposed to levy tax upon the income of the dispensaries to the extent necessary to ensure that no undue trading advantage shall be gained by them in consequence of the operation of the Commonwealth free medicine scheme.
The bill provides, therefore, for the taxation of all friendly society dispensaries which are granted approval to supply free medicine under the Commonwealth scheme. The basis of assessment will be a taxable income calculated by way of a percentage of the dispensary's gross receipts from the Commonwealth under the free medicine scheme and from its ordinary trading.
Mr. MENZIES.-Will that percentage be somewhat arbitrarily fixed?
Mr. Chifley.-Conferences have been held with all interested parties and an attempt has been made to secure agreement upon that matter. Tax will be levied at the company rate, which is at present 6s. in the Pd1, but the dispensaries will not be required to pay undistributed profits tax. The only other matter that I desire to mention at this stage is the proposed amendment to increase the sum appropriated from Consolidated Revenue for payment of the salaries and travelling expenses of the chairman and other members of the Taxation Boards of Review. Th is amendment is necessary in consequence of the Government's decision to establish a second board of review to deal with taxpayers' objections to assessments. The proposed amendments are explained in detail in the explanatory memorandum which has been circulated. I commend the bill to honorable members.
Debate (on motion by Mr. MENZIES) adjourned.