Explanatory Notes(Amendments to be moved by the Treasurer, the Honourable J. B. Chifley.)
The purpose of this amendment is to allow to companies, both public and private, deductions of gifts to the institutions and funds mentioned in the amending clause. The deduction will replace the rebate of tax which is allowable under section 160 of the Principal Act. The effect of the amendment will be to place the concessional allowances for gifts made by companies on the basis that applied before the introduction of the system of allowing concessional rebates of tax.
The amendments effected by the Income Tax Assessment Act of June, 1942, provided, inter alia, that there should be substituted for the concessional deduction from assessable income previously allowed in respect of gifts, a rebate of tax calculated, in the case of individuals, at the taxpayer's personal exertion rate and, in the case of companies, at the rate of ordinary tax payable by the taxpayer.
By clause 31 of the Bill, it is proposed that the rebate provisions, so far as they relate to gifts, shall not apply until the financial year 1943-1944, and that gifts shall be allowed to all taxpayers as deductions from assessable income in assessments for the financial year 1942-1943, i.e., from assessable income derived during the year ended the 30th June, 1942.
It is now proposed that, in the case of companies, the principle of the deduction of gifts from assessable income instead of the rebate of tax should continue to apply for the financial year 1943-1944 and subsequent years.
Companies, unlike individual taxpayers, are liable to pay taxes on income additional to the ordinary income tax at the rate of 6s. in the Pd. Both public and private companies pay taxes on undistributed income and public companies are liable to pay super tax and war-time (company) tax.
All these additional taxes are based on the taxable incomes of the companies as calculated for ordinary income tax purposes. If a deduction for gifts is not allowed in computing the taxable income of a company, no relief from the additional taxes is granted to the company in respect of the gifts. The amending clause will remove this inequity.
This amending clause is complementary to the amendment which is being made by the insertion of a new clause, viz., Clause 12A in the Bill. The effect of the amending clause is to withdraw the rebate of tax allowable to a company in respect of gifts, as the amounts of those gifts are being allowed as deductions from assessable income.