House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. Phillip Lynch, M.P.)

LOAN (INCOME EQUALIZATION DEPOSITS) BILL 1976

The purpose of this Bill is to prescribe the terms and conditions under which deposits may be made and redeemed under the income equalization deposits scheme, the main features of which have been summarised in an introductory note to clause 34 of the Income Tax Assessment Amendment Act (No. 3) 1976 elsewhere in this memorandum.

In the notes that follow each clause of the Bill is explained in detail.

Clause 1: Short title

This clause provides the short title of the Act.

The Act will authorise the borrowing of moneys by the accepting of deposits which will be known as "Income Equalization Deposits".

Clause 2: Commencement

The Act is to come into operation when it receives the Royal Assent. Deposits under the scheme will be accepted once the Act is passed into law.

Clause 3: Interpretation

Sub-clause (1) defines the principal terms employed in the Bill.

"authorised person" means the Commissioner of Taxation. Under the Bill deposits are to be made with the Commissioner and applications for repayment of deposits are to be made to the Commissioner.

"Board of Review" means a Board of Review constituted under the Income Tax Assessment Act 1936.

"deposit" means an income equalization deposit made in pursuance of the Bill.

"request" means a request under section 16, 17, 18 or 19, i.e. a request for repayment of a deposit under section 17, 18 or 19 or a request under section 16 for a declaration by the Commissioner that a deposit is repayable on the grounds that the person in respect of whom the deposit was made is experiencing serious financial difficulties.

"stock" means drought bonds issued under the Loan (Drought Bonds) Act 1969. Provision is being made for conversion of drought bonds into income equalization deposits in certain circumstances.

"year of income" is given the same meaning as in the Income Tax Assessment Act 1936.

Sub-clause (2) defines the term "depositor" as it is used in the Bill.

Where a deposit has been made by a person on his own behalf, a reference in the Bill to the depositor in relation to that deposit is a reference to that person. Where, however, a deposit has been made by the trustee of a trust estate on behalf of a beneficiary under a legal disability, a reference to a depositor in relation to the deposit is a reference to the trustee, until the disability ceases, and thereafter a reference to the beneficiary.

Clause 4: Borrowings by accepting deposits

Sub-clause (1) will authorise the Treasurer to borrow moneys by accepting deposits.

Sub-clause (2) describes deposits accepted under authority of the Act as "Income Equalization Deposits".

Sub-clause (3) provides that a deposit may not be made by or on behalf of two or more persons jointly. This means, for example, that partnerships, as such, will not be permitted to make deposits. However, the individual partners in a partnership will be able to make deposits on their own account for which they may be eligible for income tax deductions in accordance with the provisions of the income tax law. It will be noted also that, by clause 11 of the Bill, a trustee of a trust estate may make a deposit only in the circumstances specified in the clause and only on behalf of a named beneficiary. However, a beneficiary in any trust estate will be permitted to make deposits on his own account. For practical purposes, therefore, deposits may be made by any individual (including a partner in a partnership or a beneficiary in a trust estate), a company, or a trustee of a trust estate on behalf of a beneficiary in the circumstances specified in clause 11.

Sub-clause (4) provides that the rate of interest payable in respect of deposits will be 5 per cent per annum, but will be variable by Regulation.

Sub-clause (5) restricts the lodgment of deposits to amounts of $100 or multiples of $100. Similarly, under clause 21, deposits can only be withdrawn in amounts of $100 or multiples of $100.

Sub-clause (6) authorises the Treasurer to determine terms and conditions on which the deposits will be accepted. The Treasurer's determination would relate to matters not provided by the Act. In particular, the Treasurer's determination would be subject to sub-clauses (3), (4) and (5) of this clause and to Part III of the Act which lays down the terms and conditions relating to redemption.

In accordance with normal loan raising procedures, approval for the terms and conditions has been sought and obtained from the Australian Loan Council. All terms and conditions as specified in the Act and Regulations and as determined by the Treasurer under this clause will be set out fully in a statement which will be available to the public.

Clause 5: Records relating to deposits

Sub-clause (1) obliges the Treasurer to cause records to be kept in relation to the making or repayment of deposits.

Sub-clause (2) provides that the Commissioner of Taxation may certify matters relating to the making or redemption of a deposit. Sub-clause (3) provides that a document purporting to be a certificate under sub-clause (2) shall, unless the contrary is established, be deemed to be a certificate duly made.

Clause 6: Expenses and interest to be paid out of Consolidated Revenue Fund

This clause appropriates the Consolidated Revenue Fund to the extent necessary to meet the expenses of flotation and management and interest payments due on income equalization deposits.

Clause 7: Establishment of Income Equalization Deposits Trust Account

Sub-clause (1) establishes the Income Equalization Deposits Trust Account.

Sub-clause (2) provides that it is a Trust Account for the purposes of section 62A of the Audit Act 1901. This will permit the investment of funds standing to the credit of the Trust Account in Commonwealth securities. Interest earned by these investments will be paid to the Consolidated Revenue Fund.

Clause 8: Loan moneys to be paid into Trust Account

Proceeds received by acceptance of income equalization deposits will, in accordance with the Audit Act, be paid to the Loan Fund.

Sub-clause (1) appropriates the Loan Fund to the extent necessary to transfer these proceeds to the Income Equalization Deposits Trust Account.

Sub-clause (2) provides that income equalization deposits will be repayable from the Trust Account.

This procedure was also adopted in respect of the drought bonds scheme, which will be replaced and extended by the income equalization deposits scheme.

Clause 9: National debt sinking fund not to apply

Since repayment of the deposits is to be made from the Trust Account established by clause 8, there is no need for the Commonwealth to make sinking fund contributions in respect of income equalization deposits accepted. The Bill accordingly provides that the National Debt Sinking Fund Act shall not apply to amounts deposited.

This procedure was also adopted in respect of the drought bonds scheme, which will be replaced and extended by the income equalization deposits scheme.

Clause 10: Manner of making deposits

Clause 10 of the Bill provides that a deposit is to be accompanied by an application on a form made available by the authorised person, i.e. the Commissioner of Taxation and is to contain such information as is required by the form.

Clause 11: Deposits on behalf of beneficiaries of certain trust estates

Clause 11 specifies the circumstances in which a deposit may be made by the trustee of a trust estate on behalf of a beneficiary.

Sub-clause (1) of clause 11 provides that a deposit may be made by the trustee of an "eligible trust estate" on behalf of a beneficiary who is presently entitled to a share of the trust income but is under a legal disability.

For the purposes of the Income Tax Assessment Act, a deposit so made will be deemed, by proposed section 159GB of that Act, to have been made by the beneficiary if the trust estate carries on a business of primary production and, by virtue of his interest in the income of the estate, the beneficiary is deemed by that section to be a primary producer.

Sub-clause (2) of clause 11 provides that a trustee of a trust estate is not otherwise entitled to make a deposit in his capacity as trustee.

Under sub-clause (3) "eligible trust estate" means, broadly, one that resulted from a will or intestacy, i.e. a deceased estate.

Clause 12: Conversion of drought bonds

Sub-clause (1) provides that the holder of a parcel of drought bonds may apply to convert his holding into an income equalization deposit to the extent of any unrecouped income tax deduction in respect of the parcel. There is no provision for the conversion of drought bonds in respect of which there is no unrecouped deduction. These would be redeemable at the request of the depositor who could, if he so desired, request the Commissioner of Taxation to declare the bonds to have become redeemable and invest the proceeds of redemption in income equalization deposits.

Sub-clause (2) provides that an application for conversion of drought bonds is to be made on a form supplied by the authorised person, i.e. the Commissioner of Taxation, and to contain such information as is required by the form.

Sub-clause (3) provides that the conversion, which is achieved under the Loan (Drought Bonds) Act and this Act by the Bonds being deemed to have been redeemed and the deposit to have been made, shall be taken to have occurred on the date on which the application is made. This will have significance for the calculation of interest both in respect of the drought bonds and the conversion deposit and for the purposes of the provisions relating to repayment of income equalization deposits - in particular in accordance with clauses 16 and 17 of this Bill.

Appropriate amendments to the Loan (Drought Bonds) Act being submitted together with this Bill complete the legislative requirements for conversions.

Sub-clause (4) provides that interest on "conversion deposits" does not commence until the first day of the month following the date on which conversion application is made. A complementary amendment to the Loan (Drought Bonds) Act will ensure that interest on Drought Bonds converted will continue to the end of the month in which conversion application is made.

These provisions will ensure continuity of interest (under Drought Bonds prospectuses accrued interest is paid on a completed month basis) and will avoid any conflict with existing procedures for the payment of interest.

Clause 13: Deposits not transferable

This clause prevents a depositor from negotiating his rights in respect of a deposit. The income tax law provides the conditions for the allowance of a deduction in respect of a deposit in the assessments of a depositor and for an amount to be included in assessable income of the depositor when a deposit becomes repayable. It follows that it would not be appropriate for rights in respect of a deposit to be transferable from the depositor to any other person.

Clause 14: Stamp duty not payable in respect of deposits

This provision is in accordance with existing practice that the Commonwealth exempts its borrowing instruments from stamp duty and also the instruments made to effect deposits, withdrawals or interest payments.

Clause 15: Interpretation

The purpose of this clause is to adapt, for the purposes of the provisions of the Bill relating to the repayment of deposits, the definition of unrecouped deductions in proposed section 159GA of the Income Tax Assessment Act.

Paragraph (a) states that for the purposes of Part III of the Bill an unrecouped income tax deduction shall be deemed to exist in respect of a deposit if an unrecouped deduction is deemed to exist under proposed Division 16C of the Income Tax Assessment Act. Broadly, this is the case where the deduction allowable in respect of a deposit exceeds any amount included in assessable income as a result of any part of a deposit having become repayable.

Paragraph (b) provides in effect that the amount of the unrecouped income tax deduction in respect of a deposit shall be deemed to be the amount of that excess.

Clause 16: Repayment within 12 months on grounds of financial difficulties

Broadly this clause will provide for the making of a request to the Commissioner of Taxation, within 12 months of lodging a deposit, for a declaration that the deposit is repayable on the grounds that the depositor is experiencing serious financial difficulties. Where a deposit has been made by the trustee of a trust estate on behalf of a beneficiary, a reference to the depositor in this context is a reference to the beneficiary.

Sub-clause (1) of clause 16 provides that a person who, in accordance with sub-clause 3(2) of the Bill, is the depositor in relation to a deposit may, within 12 months after the date on which the deposit was made, and on the grounds set out in sub-clause (2), request the authorised person, i.e. the Commissioner of Taxation to declare all or part of the deposit to be repayable.

Sub-clause (2) of clause 16 specifies that the grounds on which a request under sub-clause (1) may be made -

(a)

where the deposit was made by a trustee on behalf of a beneficiary - that the beneficiary is experiencing serious financial difficulties; or

(b)

in any other case, i.e. in any case in which the deposit was made by a person on his own behalf -that the person who made the deposit is experiencing serious financial difficulties.

In the case of a deposit made after 31 January 1977 (i.e. in respect of 1976-77 and later years of income), the difficulties are required to have resulted from circumstances not in existence at the time the deposit was made.

Sub-clause (3) provides that where, in relation to a person, there are two or more deposits in respect of which an unrecouped income tax deduction exists a request may not be made under clause 16 (in respect of a deposit of less than one year's standing) unless, at the same time, any earlier deposit is the subject also of a request under clause 16 or, in the case of a deposit of more than one year's standing, under clause 17.

Sub-clause (4) of clause 16 provides that, where the Commissioner of Taxation is satisfied as to the grounds of a request under clause 16, he shall declare that the deposit or the part of a deposit to which the request relates is repayable. Upon the making of a declaration the deposit or part thereof is deemed to have become repayable. Provision is made in clause 22 for the situation in which the Commissioner does not meet a clause 16 request.

Clause 17: Repayment of deposits after the expiration of 12 months

Clause 17 provides that, at the expiration of 12 months from the date on which a deposit is made, the deposit is to be repayable on request made by the depositor to the Commissioner of Taxation. Where, in relation to a person, there are two or more deposits in respect of which there is an unrecouped income tax deduction, requests for repayment under clause 17 are to be made on a first-in first-out basis.

Sub-clause (1) of clause 17 provides that a person who is the depositor in relation to a particular deposit may, at any time after the expiration of 12 months from the date on which the deposit was made, make a request to the authorised person, i.e. the Commissioner of Taxation, for repayment of all or part of the deposit.

Sub-clause (2) provides that where, in relation to a person, there are two or more deposits in respect of each of which there is an unrecouped income tax deduction, a request may not be made under clause 17 for the repayment of one of those deposits made on any particular date unless, at the same time, a request is made for repayment of any of those deposits made at an earlier date.

Sub-clause (3) of clause 17 provides that where a request is made in accordance with clause 17 the deposit or part thereof, as the case may be, automatically becomes repayable on the date on which the request is made. A declaration by the Commissioner to this effect is not necessary.

Clause 18: Repayment of deposits in respect of which no income tax deduction has been allowed

This clause provides for the repayment of a deposit which, in whole or in part, is not deductible for income tax purposes, e.g. because the person in respect of whom the deposit is made is not a primary producer or because he has insufficient gross receipts from primary production or taxable income to permit the allowance of a deduction for the full amount of the deposit. The 12 months restriction period applicable to requests under clause 17 does not apply to a request under clause 18. A request under clause 18 may, however, be made only after an assessment of the year of income to which the deposit relates has been made or the taxpayer has been notified by the Commissioner of Taxation that no tax is payable by him in respect of that year of income.

Sub-clause (1) of clause 18 sets out the circumstances in which a request under clause 18 may be made. These are that a deposit has been made in the relevant period in relation to a year of income either by a person on his own behalf or by a trustee on behalf of that person and -

(a)

an income tax assessment in respect of the year of income of the person has been made; or

(b)

the Commissioner of Taxation has notified him that no income tax is payable.

Sub-clause (2) provides, in effect, that a request may not be made under sub-clause (1) in respect of so much, if any, of a deposit as has been allowed as a deduction for income tax purposes. Thus a request may not be made in relation to the whole of a deposit if there is any unrecouped income tax deduction in respect of the deposit (paragraph (a) of sub-clause (2)). Also, under paragraph (b) of sub-clause (2), a request is not to be made in relation to any greater amount than the excess of the amount of a deposit over the unrecouped deduction in relation to the deposit (i.e. the undeducted portion of the deposit). If a part of a deposit has previously become repayable, a request may not be made in relation to an amount greater than the excess of the amount remaining on deposit over the amount of the unrecouped income tax deduction.

Sub-clause (3) provides that where a request is duly made under clause 18 to the Commissioner, in respect of all or part of a deposit, the deposit becomes repayable on the date on which the request is made. A declaration by the Commissioner to this effect is not necessary.

Sub-clause (4) provides that, for the purposes of clause 18, the term "relevant period" has the same meaning as in Division 16C of Part III of the Income Tax Assessment Act (see notes on proposed section 159GA - clause 34 of the Income Tax Assessment Amendment Bill(No. 3)1976).

Clause 19: Repayment of excess deposits

Where at any time a person's holdings of drought bonds together with moneys on deposit under the income equalization deposits scheme exceed $100,000, income equalization deposits equal to the amount of the excess are by clause 19 to become repayable on request to the authorised person, i.e. the Commissioner of Taxation.

Sub-clause (1) of clause 19 sets out the circumstances in which a request under clause 19 may be made. These are that the sum of -

(a)

income equalization deposits made by a person on his own behalf less any amounts that have become redeemable;

(b)

income equalization deposits made by a trustee of a trust estate on behalf of the person less any amounts that have become redeemable; and

(c)

any drought bonds held by the person

exceeds $100,000.

In this situation the person who, in relation to any of the deposits referred to in (a) or (b) above, is the depositor as defined in sub-clause 3(2) may, subject to other provisions of clause 19, request repayment of any of those deposits.

Sub-clause (2) provides, in effect, that a request may not be made under sub-clause (1) in respect of so much, if any, of a deposit as has been allowed as a deduction for income tax purposes. Thus a request may not be made in relation to the whole of a deposit if there is any unrecouped income tax deduction in respect of the deposit (paragraph (a) of sub-clause (2)). Also under paragraph (b) of sub-clause (2) a request is not to be made in relation to any greater amount than the excess of the amount of a deposit over the unrecouped income tax deduction in relation to the deposit (i.e. the undeducted portion of the deposit). If a part of a deposit has previously become repayable a request may not be made in relation to an amount greater than the excess of the amount remaining on deposit over the amount of the unrecouped income tax deduction.

By sub-clause (3), a request for repayment of an amount greater than the excess referred to in sub-clause (1) is of no effect. Where two or more requests are made under clause 19 on the same day none of those requests will be of any effect if the sum of the amounts specified in the requests is greater than that excess.

Sub-clause (4) fixes the date a request is made for repayment of a deposit under clause 19 as the date on which the deposit becomes repayable.

Clause 20: Repayment in case of death, bankruptcy or winding up

Under this clause a deposit made on behalf of any person is to be declared to be repayable by the authorised person, i.e. the Commissioner of Taxation, on the death or bankruptcy of the person or, in the case of a company, on commencing to be wound up. A declaration may not however be made under clause 20 while a request under clause 16 is pending or if a request has been duly made under section 17, 18 or 19.

Sub-clause (1) provides that, on becoming satisfied that -

(a)

a person who has made a deposit on his own behalf; or

(b)

a beneficiary on whose behalf a deposit has been made by the trustee of a trust estate

has died or become bankrupt, the Commissioner of Taxation shall, subject to the restriction mentioned in sub-clause (3), declare that the deposit is repayable.

Sub-clause (2) provides that on becoming satisfied that a company that has made a deposit has been, or is being, wound up the Commissioner shall subject to sub-clause (3) declare that the deposit has become repayable.

Sub-clause (3) provides that a declaration in respect of a deposit may not be made under sub-clause (1) or (2) while a request under section 16 in respect of the deposit is pending or if a valid request has been made under section 17, 18 or 19. This will ensure that a request for repayment under any of those sections will be dealt with notwithstanding the death etc. of the person in respect of whom the deposit was made. In particular this will mean that, where a request is made under section 16 on the grounds of serious financial difficulties and a declaration is made in pursuance of the request, any amount to be included in assessable income as a result of the deposit becoming repayable will be included in the assessable income of the year in which the request was made. In some circumstances this may be a year other than the year in which the death etc. of the person occurred. Where a deposit is declared to be repayable under clause 20, any amount to be included in assessable income is, by proposed section 159GD of the Income Tax Assessment Act, to be included in the assessable income of the year of death etc. of the person in respect of whom the deposit was made.

Clause 21: Deposits to be redeemed

This clause restricts withdrawals to amounts of $100 or multiples of $100, in order to be consistent with clause 4(4) which places a similar restriction on lodgment of deposits.

Clause 22: Reference to Board of Review

Clause 22 provides a depositor with a right to have a request under clause 16 considered by a Board of Review if the authorised person i.e. the Commissioner of Taxation does not, in pursuance of the request, declare the deposit specified in the request to have become repayable.

Sub-clause (1) provides that, where a depositor makes a request to have a deposit declared to be repayable on the grounds that he is experiencing serious financial difficulties and the Commissioner of Taxation has not met the request within one month, the Commissioner shall notify the depositor of his reasons for not declaring the deposit to be repayable.

Sub-clause (2) provides for a modification of sub-clause (1) where the Commissioner is required to obtain additional information in connexion with a request. In this type of case the Commissioner is not required to notify the depositor of his reasons for not declaring the deposit to be redeemable earlier than one month after the information is furnished or two months after the original request was made, whichever period expires first.

Sub-clause (3) allows the depositor, within one month of receiving the notice from the Commissioner, to have his request referred (through the Commissioner) to a Board of Review (clause 3 of the Bill defines a Board of Review as one that is constituted under the Income Tax Assessment Act).

Sub-clause (4) directs the Commissioner, upon payment of the prescribed fee (if any), to refer the request to a Board of Review.

Sub-clause (5) vests in the Board of Review the powers and functions of the authorised person i.e. the Commissioner of Taxation in relation to the request. In effect the Board of Review takes the place of the Commissioner.

Sub-clause (6) provides for the case where a Board of Review refuses to make a declaration in accordance with the taxpayer's request. A Board of Review in such a case is obliged to give its decision in writing and, if so requested by the Commissioner or the person who made the request, to state its reasons for the decision.

Sub-clause (7) provides that, for the purposes of clause 22, a Board of Review shall be constituted by the Chairman of the Board or another member authorised in writing by the Chairman.

Sub-clause (8) authorises the making of regulations under this Bill, concerning the giving of notices and directions relating to a reference to a Board of Review, proceedings before a Board of Review, and the refund, in certain circumstances, of the prescribed fee, if any, (sub-clause (4)).

Clause 23: Requests under section 16 to lapse in certain circumstances

Clause 23 provides that a request under clause 16 in relation to a deposit or part of a deposit is to lapse if, while the request is pending, a request in relation to a deposit is duly made under clause 18 or 19.

A request may be made under clause 18 only if, on the making of an assessment in respect of the year of income in relation to which a deposit is made, there is no unrecouped deduction in respect of the deposit, or an unrecouped deduction that is less than the amount of the deposit, i.e. if no deduction has been allowed, or a deduction has not been allowed for the full amount of the deposit in the relevant assessment. This could occur because of insufficiency of taxable income or gross receipts from primary production, or because the depositor concerned was not a primary producer.

Similarly a request under section 19 may be made only where a deduction in respect of a deposit or a part of a deposit has been disallowed by reason of the limit of $100,000 on deductions for income equalization deposits and drought bonds held by a taxpayer.

As there is no income tax consequence of a deposit that may be the subject of a request under clause 18 or 19 becoming repayable, it follows that there would be no consequence of such a deposit becoming repayable as a result of a declaration under clause 16. No purpose would therefore be served in determining a clause 16 request, once the conditions for the making of a request under clause 18 or 19 have been satisfied and a request under one of those clauses has been duly made. Moreover, once a request is duly made under clause 18 or 19, the amount specified in the request automatically becomes repayable. Accordingly the interests of the depositor are best served by providing for a clause 16 request to lapse if he makes a valid request under either clause 18 or 19.

Clause 24: Provision applicable where request under section 16 pending 12 months after making of deposit

Clause 24 deals with the case where a request under clause 16 in relation to a deposit or part of a deposit is pending at the expiration of a period of 12 months from the date on which a deposit is made. In those circumstances clause 24 provides that, except where the person in respect of whom the deposit was made has died, become bankrupt or, being a company, commenced to be wound up, the clause 16 request is to lapse and the amount specified in the request is to become repayable at the expiration of that 12 months period. However, the depositor will have a right to apply to the Commissioner of Taxation for a declaration that the ground on which the request was made was established. Where this right is not exercised the deposit will be deemed to have become repayable in pursuance of a request under section 17 and an amount equal to the unrecouped deductions, if any, in respect of the deposit will be included in the assessable income of the depositor of the year of income in which the 12 months period expired. Where, however, the depositor applies for a declaration in pursuance of his request, and the request is met, the relevant amount will be included in the assessable income of the year in which the request was made. It is expected that a depositor would apply for a declaration only if the request was made in a year of income different from that in which the 12 months period expires. Otherwise the obtaining of a declaration would not have any consequence for income tax purposes other than that which flows from the deposit being deemed to have become repayable in pursuance of a clause 17 request.

By sub-clause (1), clause 24 is to apply in relation to any clause 16 request that is pending at the expiration of a period of 12 months from the date on which the deposit was made unless, before the expiration of that period, the person in respect of whom the deposit was made has died, become bankrupt or, being a company, commenced to be wound up. In such a case the clause 16 request will have to be determined, notwithstanding the death etc., of the person or the expiration of the 12 months period. If the request is met, the assessable income of the year in which the request was made will include any amount that is to be brought to account as assessable income as a result of the deposit becoming repayable. This could be a year earlier than that in which a person died etc. or in which the 12 months period expired. If the request is not met, any assessable amount will be included in the income of the period to the date of death etc. and not, as in a case to which clause 24 applies, the year in which the 12 months period expires.

Sub-clause (2) of clause 24 provides that, if a clause 16 request to which clause 24 applies is pending at the expiration of 12 months after the date on which a deposit is made, it is to lapse and, except as otherwise provided by the clause, is to be deemed to have become repayable in pursuance of a clause 17 request. The consequences of this have been mentioned above.

Sub-clause (3) provides a period of one month after the date on which a deposit becomes repayable under sub-clause (2) for the person who made the request to apply to the Commissioner for a declaration that the ground on which the request was made was established.

Sub-clause (4) provides that, where the Commissioner makes a declaration in accordance with the application, the deposit shall be deemed to have become repayable under clause 16 rather than clause 17. Accordingly the amount, if any, to be included in the assessable income in pursuance of the deposit having become repayable will be included in the assessable income of the year in which the request was made rather than the year in which the period of 12 months from the date of the deposit expired.

Sub-clause (5) requires the Commissioner, if he has not made a declaration within one month of the making of the application, to give notice to the person who made the clause 16 request of his reasons for not making the declaration sought.

Sub-clause (6) provides a period of one month from the date on which notice is given under sub-clause (S) in which the person who made the application may direct the Commissioner to refer his application to a Board of Review.

Sub-clause (7) provides that the Commissioner shall, upon receipt of a direction under sub-clause (6) and upon payment of the prescribed fee, if any, refer the application to a Board of Review.

Sub-clause (8) confers on the Board of Review the same powers and functions in relation to the application as the Commissioner and a declaration by the Board in pursuance of the application is to be deemed to have been made by the Commissioner.

Sub-clause (9) provides that, where the Board decides not to make a declaration in accordance with the application, it shall give its decision in writing and, if so requested by the Commissioner or the applicant, state its reasons for the decision.

Sub-clause (10) provides that, for the purposes of clause 24, the Board of Review shall be constituted by the Chairman of the Board or another member authorised by him in writing.

Sub-clause (11) allows regulations to be made under this Bill to make provision for the giving of notices and directions concerning a reference to a Board of Review under this clause, proceedings before a Board under the clause and the refund in certain circumstances of the prescribed fee (sub-clause (7)).

Clause 25: Form of requests

Sub-clause (1) of clause 25 provides that any request or application under Part III of the Bill is to be in writing in accordance with a form approved by the Commissioner of Taxation and signed by the person making the request or application. The clause will apply to any request for repayment of a deposit under clause 17, 18 or 19 and to any request under clause 16 for a declaration that a deposit is repayable on the grounds that a person in respect of whom the deposit was made is experiencing serious financial difficulties. The clause will also apply to an application for a clause 16 request to be referred to a Board of Review in circumstances in which clause 24 of the Bill applies.

Sub-clauses (2) and (3) provide for the case in which a request is made (under clauses 16 to 19) in relation to a deposit that has been made by the trustee of a trust estate on behalf of a beneficiary who at the time the deposit was made was under a legal disability. Where the request is made by the trustee it is to be accompanied by evidence to show that the beneficiary is still under a legal disability (sub-clause (2)). Where the request is made by the beneficiary, it is to be accompanied by evidence to show that the beneficiary is no longer under a legal disability (sub-clause (3)).

Clause 26: Lodging of deposits, requests, directions and applications

Clause 26 requires that any deposit, request or application under the Bill be lodged with the authorised person, i.e. the Commissioner of Taxation, or any person to whom the Commissioner has delegated any of his powers under the Bill in pursuance of clause 27. The deposit, etc. is to be deemed to have been made at the time when it is so lodged.

Clause 27: Delegation by authorised person

Sub-clause (1) of clause 27 will enable the Commissioner of Taxation to delegate to a Second Commissioner of Taxation, or to an officer, all or any of his powers under the Bill (other than the power of delegation). Under sub-clause (2) powers exercised by a delegate are for the purposes of the Bill to be deemed to have been exercised by the Commissioner.

Sub-clause (3) provides that a delegation under clause 27 does not prevent the exercise of a power by the Commissioner.

Clause 28: Regulations

Sub-clause (1) provides that the Governor-General may make regulations not inconsistent with the Bill. In particular, the regulations -

(a)

may require a depositor, the personal representative of a depositor, the trustee in bankruptcy of a depositor or the liquidator of a company that is a depositor to furnish information to the Commissioner of Taxation; and

(b)

may prescribe penalties, not exceeding $200, for offences against the regulations.

Sub-clause (2) defines "depositor" for the purposes of sub-clause (1) to be the beneficiary where the deposit is made on his behalf by a trustee.