House of Representatives

Second Reading Speech

by the Treasurer, the Hon. P.J. Keating, M.P.

The third Bill in the legislative package to recoup the tax sought to be avoided under new generation trust stripping schemes proposes amendments to several Acts, consequential upon the two Bills I have already introduced.

The first amendment is that of the Administrative Decisions (Judicial Review) Act 1977.

Decisions under certain Acts are precluded from review through the system of review provided for by that Act.

Decisions under the new Trust Recoupment Tax Legislation are also to be excluded from the purview of the Administrative Decisions (Judicial Review) Act, consistent with the position that prevails in relation to decisions under various other Commonwealth Laws.

However, a trustee or other person liable for Trust Recoupment Tax who is dissatisfied with an assessment by the Commissioner, will have available full rights of objection and appeal to a Taxation Board of Review or a Supreme Court and ultimately, if the matter warrants it, to the Federal and High Courts.

Other taxation laws administered by the Commissioner of Taxation that provide similar rights to contest liability are also excluded from review under the Administrative Decisions (Judicial Review) Act.

Two other Acts to be amended as a consequence of the Trust Recoupment Tax legislation deal with the Commonwealth/State tax sharing arrangements.

The first of the Tax Sharing Acts dealt with by this Bill is the Local Government (Personal Income Tax Sharing) Act 1976.

Under Section 4A of that Act, the Commissioner of Taxation is required by the end of July each year, to make a determination as to the amount of net personal income tax collections for the year.

That determination is then used as the basis for the allocation of funds to the states by way of financial assistance for local government purposes.

As the Trust Recoupment Tax legislation basically seeks to recover personal income tax sought to be avoided, the Local Government (Personal Income Tax Sharing) Act is to be amended to include net collections of trust recoupment tax as part of the tax sharing base.

The amendment proposed to the States (Tax Sharing and Health Grants) Act 1981 will also include collections of Trust Recoupment Tax in the tax base.

This proposal is consistent with the intention of that legislation.

In 1981, an understanding was reached with the states that they would receive tax sharing grants calculated by reference to a "total" tax base rather than the personal income tax base used in previous arrangements.

That understanding requires that newly introduced commonwealth taxes be included in the tax base.

While the existing legislation allows for such new inclusions through the promulgation of regulations, the necessity for other consequential amendments provides an opportunity to include this amendment within a total legislation package.

The Bill further proposes two minor technical amendments of the Taxation Administration Act 1953 following the substantial changes made to that Act last year.

The proposed amendments give effect to the intention to adapt and apply the machinery provisions of the income tax law for the purposes of the proposed Trust Recoupment Tax law.

Finally, the Bill proposes to amend the Taxation (Interest on Overpayments) Act 1983.

Those amendments will mean that the Commissioner of Taxation will pay interest on refunds of trust recoupment tax following a successful objection or appeal against a trust recoupment tax assessment.

I also commend this Bill to the House.