Notes for the Minister's Second Reading Speech.
The purpose of this Bill is to amend the Income Tax Assessment Act to give effect to proposals announced by the Treasurer in his Budget Speech. These proposals relate to concessional deductions and to provisions affecting primary producers.
The Bill proposes an increase of $26 in the amounts of concessional deductions allowable for the maintenance of dependants. The deductions for a spouse, a daughter-housekeeper, a housekeeper, an invalid relative and a parent will each be increased from $286 to $312. The deductions for a student child under 21 years of age and one child under 16 years of age will be increased from $182 to $208, and for each other child under 16 years of age from $130 to $156.
An increase of $400 is proposed in the amount of the concessional deduction for payments by a taxpayer to provide superannuation or insurance benefits for himself and his family. The new limit will be $1,200 for each income year.
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 are being reflected in reduced tax instalment deductions which have operated as from 1st October.
The remaining amendments proposed by the Bill apply to primary producers.
One amendment proposed will apply to primary producers who, because of drought, fire or flood, are forced to sell livestock. Under the present law, a primary producer who is forced to sell livestock in these circumstances may elect to have the profits of the sale taxed over a period of five years if the proceeds of the sale are used principally for the purpose of restocking.
The Bill proposes an alternative method of bringing the profits of a forced sale to account for income tax purposes. Broadly, a primary producer who uses the proceeds of a forced sale principally for restocking may, in respect of sales in 1967/68 or a subsequet year, elect to have the profit on the sale applied to reduce the cost for income tax purposes of the replacement stock. This will have the effect of deferring payment of tax on the proceeds of a forced sale until the replacement stock are sold in the normal course of business.
In some cases stock may be replaced by breeding rather than by purchase. In these circumstances, it is proposed that 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 amount 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 assessable income of that year.
In the past two years, the Government has introduced temporary measures to assist wool growers who, because of the drought, advanced shearing dates during the 1964/65 and 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 wool growers to elect to transfer the net proceeds of the second clip to the succeeding income year so that these proceeds were taxed in the year in which they would ordinarily 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.
The Bill also proposes the continuation, without any limit as to time, of the special 20 per cent depreciation allowances on plant and structural improvements used for primary production purposes.
The final amendment proposed by the Bill is the allowance of an outright deduction in the year of incurrence for the full cost of subdivisional fencing erected on land used in primary production. At present, this fencing is generally subject to annual depreciation allowances at the special rate of 20 per cent per annum. Boundary fences or fences around stock-yards are not included in the proposal but will remain subject to depreciation allowances. The amendment will apply to expenditure incurred on subdivisional fencing during the 1967/68 income year and subsequent years.
More detailed explanations of the Bill are contained in explanatory notes which are being made available to honourable senators and I do not propose to speak at greater length on the Bill at this stage.
I commend the Bill to Honourable Senators.