House of Representatives

Income Tax Assessment Bill (No. 4) 1972 [No. 2]

Income Tax Assessment Act (No. 5) 1972

Second Reading Speech

Mr Sneddon (Bruce-Treasurer) (9.50)-I move:

That the Bill be now read a second time.

This Bill has 2 main provisions. One will amend the Income Tax Assessment Act to increase concessional deductions for the maintenance of dependants. The other will provide a deduction for expenses of a taxpayer in obtaining educational qualifications connected with income-producing activities in cases where the expenses are not deductible under the present law. Both measures were foreshadowed in my Budget Speech.

The amendments to the dependants allowances will mean that the maximum deductions available under the law for the maintenance of a spouse, a parent, a parent-in-law, a housekeeper and a daughter-housekeeper will each be advanced from $312 to $364. Similarly, deductions available for maintenance of a student, an invalid relative and for one child under 16 years of age will each move up from $208 to $260. For other children under 16 the deduction will be increased from $156 to $208.

I have explained in my Budget Speech that these increases in dependants allowances, together with the reductions in income tax proposed by the Bill I have already introduced, are directed to easing the tax burdens of the family man and the single income family in particular. PAYE deductions from salaries and wages paid from 1st September 1972 will take both changes into account.

The measure dealing with what have become known as self-education expenses is an important one. Many people spend money on educational courses with a view to obtaining qualifications to aid them in earning income. This expenditure may not be deductible for income tax purposes because, according to long-standing principles on which the general deduction provisions of the income tax law are based, it is either not incurred in the course of producing income or is private expenditure.

The Government has decided, however, that a concession should be available for people who set themselves the task of gaining educational qualifications connected with their careers. We therefore propose a special concessional deduction for expenditure incurred by a taxpayer on fees, books and equipment associated with a course of education he undertakes for the purpose of acquiring qualifications related to his employment or career. The new concession will not be subject to any age qualification. It will be available whether a course of education is attended on a full-time or part-time basis or is carried on by correspondence.

As is the case with the concession now provided to a parent for the education of children, the maximum deduction under the new concession in any income year will be $400. Also in line with the deduction granted to a parent, a deduction will not be allowable for expenses recouped under the Commonwealth scheme for secondary and technical scholarships.

The new concession will complement the present allowance for education expenses and will be limited to the difference between the amount of $400 and any amount allowable to a parent or other person for the education expenses of the taxpayer. It is proposed that both the deduction for self-education expenses and the increased dependants allowances will be allowable in assessments based on income derived in the 1972-73 income year and subsequent years.

The provisions of the Bill referring to provisional tax are consequential on the reductions in the general rates of tax and the increase in the minimum taxable income for the 1972-73 financial year proposed by the Income Tax Bill 1972. These provisions will have the effect that the reductions in personal income tax rates and the increased minimum taxable income for individuals will be fully reflected in amounts of provisional tax in respect of the 1972-73 income year. Technical aspects of the Bill are explained in a memorandum circulated to honourable members. I commend the Bill to the House.

Debate (on motion by Mr Crean) adjourned.

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