30 May 1918

7th Parliament · 2nd Session

The President (Senator the Hon. T. Gi vens) took the chair at 3 p.m., and read prayers.

page 5250



Senator MAUGHAN:

– Iwish to ask you, sir, whether, in view of what happened on Friday last to telegrams placed in the letter-box used by a member of the Commonwealth Parliament, you will issue instructions that if telegrams or letters are placed in a senator’s box, on no account shall they be removed by any parliamentary official; nor shall any such official permit any person, unless on the order of a senator, to interfere with or romove such telegrams or letters from the boxes set apart for senators’ correspondence ?


Senator Maughan very courteously furnished me with a copy of the question he has asked, but I have not since been able to make any inquiries. I can only say that I have no knowledge of anything in particular happening last Friday. I am sure, in view of what Senator Maughan has said, that something did happen, but I have no knowledge of it. With regard to the general question raised, I have to say that the correspondence of honorable senators should be regarded as sacred in this building. So far as I can, I shall prevent any interference whatever with such correspondence. To issue instructions such as has been suggested by the honorable senator’s question, I am afraid, would not meet what he desires, because interference with the correspondence of honorable senators may be at their own request. So far us I can, I shall see that their correspondence is kept sacred.

page 5250



Senator THOMAS:

– Is the Minister for Defence in a position now to answer the questions I put to him concerning the closing of the Torrens Arms Hotel, Mitcham, South Australia?

Senator PEARCE:
Minister for Defence · WESTERN AUSTRALIA · NAT

– The honorable senator, on the 23rd May, asked me the following questions : -

  1. Did the State Commandant in South Australia put the Torrens Arms Hotel, Mitcham, out of bounds?
  2. Was an inquiry held as to his action ?
  3. Was the embargo removed as the result of the inquiry?
  4. Will the Minister lay on the table of the Senate the report and’ papers of the Committee that inquired into the above circumstances?
  5. Is it a fact that either on. 17th or 24th April, when some general reinforcements- were due to leave, it was found that Borne of the men detailed to. go were at the Torrens Arms Hotel, and were unable to walk to the station, and had to be taken there in cabs?

The answers to the questions are: -

  1. The State Commandant, on 18th July, 1917, placed an embargo upon the Torrens Arms Hotel in regard to the supply of liquor
*War Loan Bill (No.* 3). [30 May, 1918.] *Sinn Fein Propaganda.* 5251 to the members of the Forces, as complaints were made that men were breaking leave from camp and going there for liquor, and also that the hotel was harbouring men who were bringing disrepute on the troops in camp at Mitcham. {: type="1" start="2"} 0. Representations were made that the embargo should be removed, and **Mr. George** William Launcelot Hirst, of Sydney, a special magistrate under the Invalid and Old-age Pensions Act 1908-17 was appointed to inquire and report thereon. 1. Yes. 2. On the table of the Library. 3. There is no truth whatever in the statement that when some general reinforcements were due to leave, the men detailed were found at Torrens Arms Hotel and were unable to walk to the station. The reinforcements referred to were entrained at Adelaide for Melbourne on 24th and 20th April. {: .page-start } page 5251 {:#debate-2} ### QUESTION {:#subdebate-2-0} #### TUNGSTEN AND MOLYBDENITE ORES {: #subdebate-2-0-s0 .speaker-K18} ##### Senator BAKHAP:
TASMANIA -- I ask the Leader of the Senate if he has made the promised inquiries of the Prime Minister's Department in connexion with the disparity of prices available to the producers of tungsten and molybdenite ores in Australia as compared with those in Canada? {: #subdebate-2-0-s1 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · NEW SOUTH WALES · NAT -- The matter which the honorably senator brought up by question last week was referred to my honorable colleague, the Acting Prime Minister, who states that as the result of representations previously reaching him, a communication was addressed to the Imperial authorities, but so far no reply has yet been received. {: .page-start } page 5251 {:#debate-3} ### PAPERS The following papers were presented : - >Inter-State Commission Act 1912- Prices Investigation. - No. 7 Report - Meat - Further Report on re-investigation. Public Service Act 1902-1916.- Appointment of B. S. B. Cook, Prime Minister's Department. {: .page-start } page 5251 {:#debate-4} ### WAR LOAN BILL (No. 3) Bill received from House of Representatives, and (on motion by **Senator Millen)** read a first time. {: .page-start } page 5251 {:#debate-5} ### QUESTION {:#subdebate-5-0} #### RECRUITING CAMPAIGN "March of Freedom." {: #subdebate-5-0-s0 .speaker-KMP} ##### Senator GRANT:
NEW SOUTH WALES asked the Minister for Defence, *upon notice -* {: type="1" start="1"} 0. Has the Commonwealth made arrangements with its own artists, or with any photographers, to take pictures of the "March of Freedom " now coming from the North towards Sydney? {: type="1" start="2"} 0. If so, what pictures have already been taken ? 1. By whom have the pictures been taken? 2. What is the Commonwealth interest and share in them? 3. What is the estimated cost of the " March of Freedom"? 4. Have any arrangements been made by which some of the cost may be recouped? 5. Have any pictures been taken? {: #subdebate-5-0-s1 .speaker-K0F} ##### Senator PEARCE:
NAT -- The answers are - {: type="1" start="1"} 0. A Sydney weekly paper has sent a photographer. 1. Quite a number. 2. See number 1. 3. No interest. 4. Impossible to say at this juncture. 5. Residents along the route have been most generous in supplying food, fodder, &c. 6. See number 2. {: .page-start } page 5251 {:#debate-6} ### QUESTION {:#subdebate-6-0} #### SINN FEIN PROPAGANDA {: #subdebate-6-0-s0 .speaker-KRX} ##### Senator LONG:
TASMANIA asked the Minister for Repatriation, *upon notice -* {: type="1" start="1"} 0. If he has read the following paragraph that appeared in the press on the 25th inst: - "London, Sunday. " Referring to the Irish issue, the *Evening News* writes: - ' The Colonial Office has received a report from the GovernorGeneral regarding the measures taken for suppressing Sinn Fein propaganda in Australia. Apparently Sinn Feinism already has done much mischief in Australia by discouraging recruiting, and seizing upon every opportunity to manifest its hostility to the Empire.' " Is the Government aware whether the GovernorGeneral has sent such a report to the Colonial Office? , {: type="1" start="2"} 0. If so, who is responsible for the despatch of such report, the Government or the GovernorGeneral? 1. If no such report was sent to the Colonial Office, will the Government take immediate steps to have the above paragraph officially contradicted ? {: #subdebate-6-0-s1 .speaker-KUL} ##### Senator MILLEN:
NAT -- In answer to the first question, I have seen the paragraph referred to. Regarding questions 2 and 3 I am making inquiries. {: .page-start } page 5251 {:#debate-7} ### QUESTION {:#subdebate-7-0} #### AUSTRALIAN IMPERIAL FORCE " Anzacs " on Furlough. {: #subdebate-7-0-s0 .speaker-KTD} ##### Senator McDOUGALL:
NEW SOUTH WALES asked the Minister for Defence, *upon notice -* {: type="1" start="1"} 0. Has the attention of the Minister been drawn to a paragraph appearing in the Melbourne *Herald* of 28th May, which states that "fifty- two men of Australia's first division have returned to the Commonwealth on furlough, seven of these being in New South Wales. There was no welcome of a public 5252 *Economic Conscription.* [SENATE.] *Shipbuilding.* nature because nobody was aware of their arrival, and they were not treated as returned soldiers. At last somebody gave the Anzacs a leave pass, but as they were not returned invalided no tram passes were available. They were nearly all married men, and as they were only drawing a fraction of their pay, the paymaster allowed them to have a few shillings back money which had been owing to them. No deferred pay was granted them because they were not invalids. As two of the men had no private means, they went to Liverpool Camp forboard and lodgings "? 1. If the position is as stated, will the Minister have it remedied? 2. If not will the Minister have it contradicted ? {: #subdebate-7-0-s1 .speaker-K0F} ##### Senator PEARCE:
NAT -- Inquiries are being made, and a reply will be furnished as soon as possible. {: .page-start } page 5252 {:#debate-8} ### QUESTION {:#subdebate-8-0} #### ECONOMIC CONSCRIPTION Employment on Kalgoorlie to Port Augusta Railway. {: #subdebate-8-0-s0 .speaker-JXJ} ##### Senator NEEDHAM:
WESTERN AUSTRALIA asked the Minister representing the Minister for Works and Railways, *upon notice -* {: type="1" start="1"} 0. Is he aware whether, on the 25th ultimo, William and George Davies were refused work on the Trans-Australian Railway, Kalgoorlie end; but that after George Davies, who is blind in one eye, had procured a rejection badge he secured employment? 1. Is he aware whether William Davies, who did not produce a rejection badge, did not secure employment? {: #subdebate-8-0-s1 .speaker-K3E} ##### Senator RUSSELL:
Vice-President of the Executive Council · VICTORIA · NAT -- The answers are - 1 and 2. No; but inquiries, are being made. {: .page-start } page 5252 {:#debate-9} ### MOTOR DRIVERS {:#subdebate-9-0} #### Conditions of Employment **Senator NEEDHAM** asker the Minis ter for Defence, *upon notice -* {: type="1" start="1"} 0. What are the conditions attaching to the employment ofreturned soldiers as motor drivers in the Defence Department? 1. What are their usual hours of duty? 2. What wages do they receive? 3. Are they allowed overtime? 4. If delayed anywhere overnight, as the result of a breakdown, are they allowed expenses to meet the cost of board and lodgings? 5. What are the conditions attaching to motor drivers engaged in other Departments of State - {: type="a" start="a"} 0. their hours of duty. 1. if delayed anywhere overnight, as the result of a breakdown, are they allowed expenses to meet the cost of board and lodgings? {: .page-start } page 5252 {:#debate-10} ### QUESTION {:#subdebate-10-0} #### SHIPBUILDING Correspondence with Queensland Government. {: #subdebate-10-0-s0 .speaker-KSU} ##### Senator MAUGHAN: asked the Minister representing the Minister for the Navy, *upon notice -* >Will theMinister lay upon the table of the Senate all correspondence that has passed between the Commonwealth Government and the State Government of Queensland in regard to shipbuilding in that State? {: #subdebate-10-0-s1 .speaker-K0F} ##### Senator PEARCE:
NAT -- The answer to the honorable senator's question is " Yes." {: .page-start } page 5252 {:#debate-11} ### QUESTION {:#subdebate-11-0} #### NORTHERN TERRITORY White Population {: #subdebate-11-0-s0 .speaker-JYT} ##### Senator FERRICKS:
QUEENSLAND asked the Minis ter representing the Minister for Home and Territories, *upon notice -* {: type="1" start="1"} 0. What is the white population of the Northern Territory - 1. What is the number of Europeans other than British - {: type="a" start="a"} 0. Males. 2. How many of these Europeans have arrived in the Territory since the outbreak of war? 3. What number of Europeans, other than British, are employed - {: #subdebate-11-0-s1 .speaker-K3E} ##### Senator RUSSELL:
NAT -- The replies to the honorable senator's questions are as follow : - 1. (a) 3,210; (b) 356. 2. (a) 317; (b) 52. 3. (a) About 350. 4. *(a)* 35; *(b)* 109 registered for employment on the wharfs. All figures are approximate. {: .page-start } page 5252 {:#debate-12} ### INCOME TAX ASSESSMENT BILL *In Committee* (Consideration resumed from 29th May, *vide* page 5184) : Clauses 23 to 30 agreed to. Clause 31 - >After section 46a of the Principal Act, the following sections are inserted : - " 46b. Where a person dies after the first day of July in any year, and after furnishing a return of his income for the preceding year, the Commissioner shall have the same powers and remedies for the assessment and recovery of the tax from the executors or administrators as he would have had against the deceased person, if that person were alive. 46c. Where a person dies during a financial year, and his. estate is not liable to duty under the Estate Duty Assessment Act 1914, the executors or administrators of that person shall furnish a return of the *Income Tax* [30 May, 1918.] *Assessment Bill.* 5253 income derived by that person during the financial year up to the date of his death, and shall be liable for tax in respect of that income." {: #debate-12-s0 .speaker-JYR} ##### Senator FAIRBAIRN:
Victoria -- The operation of this clause will impose double taxation, and, in addition, will throw a tremendous amount of unnecessary work, not only on trustee companies, which are already overburdened with a multiplicity of returns, but also on the Department, and the result obtained from a revenue point of view will not be commensurate with the work that is involved. Estate duty is payable only in respect to estates the net value of which does not exceed *£1,000;* therefore, it follows that this provision, in the majority of cases, will affect the estates of deceased persons of moderate means who derived their income from personal exertion. The following is an example of the double taxation which will be imposed by this clause: - "A" dies on 30th September, 1918, after filing a return of his income to 30th June, 1918. The executors are assessed in respect to the income shown in the return lodged by "A" prior to his death, and pay tax thereon, the taxso paid liquidating " A's " liability for the financial year ending 30th June, 1919. " A's " executors are required to file a return of the income derived by him from 30th June, 1918, to 30th September, 1918, although " A's " liability for the year ending 30th June, 1919, has already been liquidated, and to pay tax thereon. I would like the Minister **(Senator Millen)** to look into the matter, with a view to seeing if this double taxation cannot be avoided.. The difficulty arises from the fact that income tax is really paid in advance. {: .speaker-KUL} ##### Senator Millen: -- How can it be paid in advance? {: .speaker-JYR} ##### Senator FAIRBAIRN: -- If the Minister will look carefully into the matter he will find that income tax. is practically paid in advance. The first Federal income tax was paid for the year 1915-16 on an assessment based on incomes for the previous year. It was paid for 1915-16 during that year - practically in advance. That is the practice which has been adopted throughout. In reality, the tax is always paid in advance. The Act came into operation on the 1st July, 1914, and the first year in respect of which it was levied ended on the 30th June, 1915. The first income tax was paid about March, 1915, and was assessed upon incomes for the previous year. {: .speaker-JRW} ##### Senator Crawford: -- It was practically made retrospective. {: .speaker-JYR} ##### Senator FAIRBAIRN: -- Yes. I do not wish to press the point unduly. I know that the Minister has no desire to impose double taxation, and, therefore, I ask him to look into the matter. {: #debate-12-s1 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT .-I think that **Senator Fairbairn** is labouring under a misapprehension in regard to this question. With all due respect to him, I do not see how income tax can be paid in advance, because it is based upon income that has already been earned. What really happened in the first instance was that income tax was paid nine months after the period elapsed during which the income was earned. The first income tax was paid in March, 1916, in respect of the financial year 1914-15. That year ended the 30th June, 1915. It was not until March of the following year, or nine months late, that that tax was collected. {: .speaker-JYR} ##### Senator Fairbairn: -- The Act only started on the 1st July, 1914. {: .speaker-KUL} ##### Senator MILLEN: -- What the honorable senator means is that the tax was to that extent made retrospective. It was certainly not a question of paying in advance. {: .speaker-JYR} ##### Senator Fairbairn: -- However, you might look into the point. {: .speaker-KUL} ##### Senator MILLEN: -- I shall do so; but I want to make it clear that the Bill does not propose to levy the tax upon any income in the future - it can hardly do that, because it does not' know what the income will be - and that in the particular case cited the tax was paid nine months after the end of the year in which the income had been earned. Clause agreed to. Clause 32- >After section fifty of the principal Act the following sections are inserted: - " 50a. ( 1 ) In any case where any taxpayer employed by or receiving a pension from any person, local authority, corporation, board, commission or body has in any year failed to pay the income tax payable by him within sixty days after he has been required to pay the same pursuant to the provisions of this Act, the Commissioner may declare such person, local authority, corporation, board, commission or body 5254 *Income Tax* [SENATE . ] *Assessment Bill.* to be the agent of such taxpayer so far as respects the income by way of earnings, salary, wages, allowances, pension, or stipend paid or allowed by him or it to the taxpayer.' " (2) The Commissioner may give notice to such agent setting forth the fact that the taxpayer has failed to pay the tax payable by him, and requiring the agent to pay the same on behalf of the taxpayer. " (3) The agent shall thereupon deduct and retain from time to time out of the earnings, salary, wages, allowances, pension, or stipend respectively payable by him to the taxpayer so much as is sufficient to pay the income tax, and shall pay the same in pursuance of this Act; and for any default in so doing the agent shall be liable, in addition to the tax, to a penalty not exceeding Five pounds. " (4) For the purposes of this section tax ' includes ' additional tax ' required to be paid in accordance with this Act. " 50b. Where the Commissioner is of opinion that a person in receipt of income is liable to pay tax and that it is difficult to ascertain the whereabouts of that person or to collect the tax from him, the Commissioner may require any person making payments to that person - > >to deduct from any payment which is or will become due to that person such an amount' as will be sufficient to pay the income tax which the Commissioner may assess to be paid by that person; and > >to pay the amount to the Commissioner forthwith." {: #debate-12-s2 .speaker-K1J} ##### Senator PRATTEN:
New South Wales -- This clause raises the much debated question whether employers shall be bound on notice from the Commissioner to collect tax practically from the wages of their employees. I fully admit that the clause was agreed to at the conference of Income Tax Commissioners, but that is no reason why the Senate should be called upon to pass it without discussion. It will be a cause of endless trouble and confusion without any set-off in the way of increased revenue. Apparently the object is to make every employer insist that those in his service shall pay their taxes. What business is it of the employer any more than of anybody else? The same Government machinery should be used for collecting the taxes of both employer and employee, without respect of persons. It may be impossible for the employer to carry out the duty which the clause imposes upon him. Take the case of a man who leaves his billet before the tax is sixty days due, or that of the man who works for several people in the same year. Which employer is to see that this man pays his tax? The only thing for an employer who wants to be safe to do will be to keep from his employee's wages a sufficient amount in hand to pay the tax in case of the worker's default. The worker would probably and rightly demand the money he had earned, and sue for it in a State Court, if it was his due. If the object of this legislation is to further increase the chaos existing- in the Taxation Department, then let the clause stand, but the whole point is that this Parliament should not impose upon corporations or individuals who employ labour the duty of the tax gatherer. Are employees not as honest in the payment of their taxes as employers, and have not the Government equal facilities for seeing that employer and employee alike pay their taxes? A clause such as this is not incorporated, so far as I know, in the New South Wales Income Tax Act. {: .speaker-KUL} ##### Senator Millen: -- The honorable senator gave a good reason for that yesterday when he pointed out the difference in the exemption. {: .speaker-K1J} ##### Senator PRATTEN: -- - The New South Wales Act requires the employer to furnish a schedule of the employees in his pay who are getting more than the amount of the exemption. The clause is full of pitfalls and traps. There may be something said for it in the direction of increasing the revenue, and perhaps imposing on outside individuals the obligations of the Taxation Department, but if it is passed as it stands, and imposes on the employer the obligation of collecting taxes from casual employees, we shall have confusion worse confounded, and perhaps in a small Way we shall increase the friction that sometimes occurs between the worker and those employing him. It is not the province of the corporations or individuals who employ labour in Australia to collect taxes for the Commissioner. There is a way of doing what is wanted. The employer can be made to schedule his returns so that the Commissioner will know the name and address of and amount earned during the year by every one of his employees. That is as far as this Parliament" ought to go. *Income Tax* [30 May, 1918.] *Assessment Bill.* 5255 I hope the Committee will consider the clause very carefully before agreeing to it. {: #debate-12-s3 .speaker-KTD} ##### Senator McDOUGALL:
New South. Wales -- I shall oppose the clause. It is not just or honorable to ask an employer to garnishee his employees' wages, but that is what the clause does. "Under the existing conditions of exemption a great number of working men come under the Act. Many of them work for three or four different employers during the week. How can we make an employer liable for those men's tax ? Which employer is to be liable? The clause will add to the confusion, as **Senator Pratten** says, and is unjust to the employer and employee alike. If the employer is to be liable, he must make provision to protect himselfbeforeband, and the only way to do that is to deduct a certain amount from the employee's wages. That is wrong, unjust, and unfair. {: #debate-12-s4 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- If honorable senators approve, as many of them do, of the reduction in the exemption, they must be prepared also to approve of some practical means of collecting the tax. There is no great difficulty in dealing with the class of employees who are continuously employed by one employer and whose names figure *in* the list of employees returned by every employer in the country. But that in no sense meets the case of the casual labourer who works for three or four weeks at one place, or, say, of the wharf labourer who works at one wharf to-day and another to-morrow. No employer's returns would show whether that man had or had not earned an income entitling him to pay the tax. If honorable senators do not think that those men ought to be called on to pay, the correct course is to amend the Act in that direction; but if they maintain that they should pay, they must provide the machinery for collecting the money from them. There is no other way than to follow the principle of " taxation at the source," so eloquently and frequently urged yesterday by **Senator Pratten.** He does not seem to see the charm in that principle to-day that apparently inspired him yesterday. The clause simply invites him to take a draught of that medicine which he prescribed for us yesterday in such liberal doses. I invite those who dislike the clause to suggest a practical alternative. The Government are not wedded to any particular method of doing it, still less is it desired to adopt a principle which will annoy any one, if a principle equally effective can be devised without annoyance. I therefore put it to **Senator Pratten,** who knows a good deal about the conditions of the class of men to whom I am referring, and many of whom are earning incomes fully entitling them to pay the contributions demanded under our income tax rates, to propose a better way of making them pay. It is impossible, from any returns given on employers' lists, to locate the men who pass from employer to employer, and from job to job, or even to determine what their total incomes are. {: .speaker-K1J} ##### Senator Pratten: -- On whom, then, would you place the responsibility ? {: .speaker-KUL} ##### Senator MILLEN: -In the first place, the responsibility would be on the Income Tax Commissioner to "determine whether a man was liable for taxation or not, and having done that, he would serve a notice on the employer who was then utilizing the services of the defaulting taxpayer, requiring him to make the deduction. The responsibility would not be on some past employer of the man referred to. {: .speaker-JRW} ##### Senator Crawford: -- The notice would be to collect the amount assessed. {: .speaker-KUL} ##### Senator MILLEN: -- Yes; but only if the employer is in possession' of the amount demanded. I admit that some employers may regard this as an inconvenient arrangement; but I have never yet known of any taxation 'methods that were not regarded as irksome in some way or other. Quite recentty, I, myself, received two notices from the State and Federal Income Tax Departments, and I could use a much stronger term than " inconvenience ' ' to express my feelings with regard to them. I ask honorable senators who are objecting to the clause to be practical, and say how we can collect the amount from these employees except by some' such expedient as is suggested in the Bill. The proposal is not put forward as being, in itself, desirable, but only as a necessary expedient to insure the collection of such taxation that Parliament has said shall be paid by the persons concerned. I invite **Senator Pratten** to suggest an alternative to meet the difficulty. {: #debate-12-s5 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia -- I think this proposal is simply a resurrection of the old garnishee 5256 *Income Tax* [SENATE.] *Assessment Bill.* system, imposing responsibility for the collection of the tax upon the employer, when it should be the responsibility of the Department itself. I object to the clause, not because I desire that any man should escape his legal obligations. If an employee is in receipt of wages which would bring him within the taxable area, and if he does not pay the amount of taxation demanded of him, he should be subject to the law; but I fail to see why an employer shouldbe called upon to make any deduction from his wages. The proposal is simply a mixing up of the old garnishee practice with the truck system. In the Income Tax Department we have a big staff of able men, well qualified for the positions they occupy, and this should be their responsibility. Quite recently, I noticed in the press a report that a number of people who were evading or had forgotten to pay their income taxation were haled before the Courts and penalized in some way or other. The same practice should be adopted with regard to employees who seek to evade their obligations. I do not see why the employer should be made an agent to collect this tax on behalf of the Government. {: .speaker-KSU} ##### Senator Maughan: -- Employers do not like the idea either. {: .speaker-JXJ} ##### Senator NEEDHAM: -- It appears to me, also, that the clause casts a slur upon employees. I know that some people do evade their legal obligations; but why should the Government single out employees in this way ? {: .speaker-KUL} ##### Senator Millen: -- We do not. In the Bill there are many clauses which do not single out employees. {: .speaker-JXJ} ##### Senator NEEDHAM: -- But we are dealing particularly with clause 32. {: .speaker-KUL} ##### Senator Millen: -- That, undoubtedly, is a reflection on the man who is evading his payments; but I point out that no employee who pays his taxation demands will come under the operation of the clause. {: .speaker-JXJ} ##### Senator NEEDHAM: -- There may be some who do, but I maintain that the method proposed is not the correct way in which to deal with them. The Department, as I have already said, is fully staffed with capable men, and if an employee does not pay, the Department should pursue him. {: .speaker-KUL} ##### Senator Millen: -- We are doing that. {: .speaker-JXJ} ##### Senator NEEDHAM: -- But I do not mean in the way now proposed. The clause is objectionable, and I hope the Committeewill reject it. {: #debate-12-s6 .speaker-JRW} ##### Senator CRAWFORD:
Queensland -- I should like to point out that **Senator Needham** is in error when he says that this provision will not apply to any but employees. Certainly subsection 1 of proposed new section 50a deals exclusively with employees, but proposed new section 50b applies to taxpayers generally, for it states that where the Commissioner is of opinion that a person in receipt of income is liable to pay the tax, and it is difficult to ascertain his whereabouts, the Commissioner may require any person making payments to him to deduct the amount due, and pay it to the Commissioner. After all, then, there is no invidious distinction between employees and other persons, and I would like further to remind **Senator Needham** that we have an exactly similar provision in Queensland, where employers are required under the State Act to collect an amount due from employees, in cases where the latter fail to make payments. The provision in the Bill may be regarded as in effect the garnishee order without the usual legal procedure; but so far as I am aware, employers, who are fairly well organized in Australia, have not made any complaint against it. I have not heard of any employers' organization protesting against this responsibility being placed on employers. I am well aware that in my own State a great many persons evade taxation, and without a clause of this kind I do not see how it would be possible for the Commissioner to collect the amounts due except at great expense and by the employment of a great number of tax-gatherers. Surely any honorable senator can see how difficult it would be, in the absence of a provision such as that now before the Committee, to collect taxation from men living in remote parts of the Commonwealth. One reason which, I think, should reconcile employers to this provision is the knowledge that if employees evade payment the employers themselves will have to pay a higher rate of taxation than at present. The provision in the Queensland Act has been in operation for some years. I believe it has been effective, and I have never heard a word of complaint from any one in regard to it. {: #debate-12-s7 .speaker-KMP} ##### Senator GRANT:
New South Wales -- Some time ago a person carrying on farming operations in Southern Queensland, and other people following similar occupations in Northern New South Wales, informed me that owing to the wages paid and other conditions, they were quite indifferent as to whether they continued in the business or not, because the cost of production was so great. Now we see the Government proposing to throw some extra cost upon them. Employers frequently complain in the public press that it is scarcely worth while being an employer nowadays, and that they would almost as soon return to .the ranks of the workers. They do not usually come back, by the way. The Government now seriously propose, just because a number of highly paid permanent officials in the Taxation Departments of the States have made this recommendation, ito adopt it without further consideration. They have not sufficient initiative to throw it to the winds and - using their own common sense - accept only those recommendations presented by the conference of taxing officials, which are really worth adopting. The Government have just as much right to collect the taxes due to them as have trades-people to collect their accounts from their own customers. I suggested in Committee yesterday that every taxpayer should be called upon to make public the amount of taxation which lie pays in respect both to land and to income. Honorable senators opposite seemed to treat the matter with a considerable degree of amusement. {: .speaker-JYR} ##### Senator Fairbairn: -- You did, yourself. {: .speaker-KMP} ##### Senator GRANT: -- To-day those same honorable senators are determined, if they can achieve it, that the mere employee shall disclose to his employer the exact amount of taxation that he is compelled to pay. {: .speaker-JRW} ##### Senator Crawford: -- No; he can pay the tax direct. {: .speaker-KMP} ##### Senator GRANT: -- If he does not, honorable senators opposite would have no hesitation in giving employers information which those persons would take good care to withhold from the public so far as their own dues -were concerned. {: .speaker-JRW} ##### Senator Crawford: -- An employee has no need to disclose the amount of his taxation. . {: .speaker-KMP} ##### Senator GRANT: -- If an employee paid through his employer the amount of his taxation it would be disclosed. {: .speaker-KUL} ##### Senator Millen: -- And if he did not pay to the Department or through his employer it would still be disclosed. {: .speaker-KMP} ##### Senator GRANT: -- Not publicly. {: .speaker-KUL} ##### Senator Millen: -- Yes, because the only other alternative is to levy by distress. {: .speaker-KMP} ##### Senator GRANT: -- If the employee pays in the usual way, the amount is not disclosed. {: .speaker-KUL} ##### Senator Millen: -- Then the employer does not obtain possession of the information. {: .speaker-KMP} ##### Senator GRANT: -- But the Government propose to apply their new system to only the one class of individual. And this, by the way, is a system of collection at the source. If it is good to collect taxes at their source, let us put the principle into operation all round. {: .speaker-JRW} ##### Senator Crawford: -- That is the way union dues are usually collected. {: .speaker-KMP} ##### Senator GRANT: -- Only in such cases as the Australian Workers Union, where the nien are working so hard- {: .speaker-K2L} ##### Senator Reid: -- Draw it mild! {: .speaker-KMP} ##### Senator GRANT: -- Where they are physically exhausted after their day's work and have no time to trouble' about things of that sort, the representative of the Australian Workers Union periodically waits upon the squatter, and suggests that, without further trouble, he should pay the contributions of the men. {: .speaker-JXJ} ##### Senator Needham: -- In which case they are consenting parties. {: .speaker-KMP} ##### Senator GRANT: -- The practice is not usual, however, so far as unions generally are concerned. {: #debate-12-s8 .speaker-K5V} ##### The CHAIRMAN (Senator Shannon:
SOUTH AUSTRALIA -- Order! I ask the honorable senator not to pursue that matter further. He has been quite in order in his references up to the present. {: .speaker-KMP} ##### Senator GRANT: -- It was on account of the dense ignorance of honorable senators opposite regarding the procedure in question that I thought I might be in order in explaining how unionists generally pay their contributions. The practice set out in the clause is reminiscent of the garnishee system. One 5258 *Income Tax* [SENATE.] *Assessment Bill.* would think that the officers of the Federal Income Tax Department had neither ability nor initiative, nor knowledge of how to get their debts in, and that they must, therefore, make tax collectors of the employers. There are very few employers who desire to be placed in such a situation. It is not necessary so far as income tax collection in New South Wales is concerned. The State official is not obliged to resort to any such procedure; and we are assured - although I am not in a position to vouch for it - that he collects income tax in that State with such completeness and exactness that the total of his collection in excess of the sum raised by the Commonwealth officials amounts to almost 100 per cent. If that is so, it is time the Commonwealth officials woke up and adopted the methods of the State Department. Altogether, the proposal under discussion will cause a good deal of trouble. Honorable senators are not desirous of encouraging further strikes or cessations of work. When workmen strike, production ceases, and all the parasites living on them are compelled to look around and find their own food; and that is the very last thing honorable senators opposite would liketo do. {: .speaker-K2L} ##### Senator Reid: -- Do you produce your own food? {: .speaker-K18} ##### Senator Bakhap: -- If you ask him for bread he will give you a stone. He is a mason. {: .speaker-KMP} ##### Senator GRANT: -- Any proposal of this kind, however attractive it may seem, will be found to be entirely distasteful to all employers. Not one of them has asked the Government that they should be saddled with this unnecessary source of annoyance. I suggest that the Government, while adopting certain excellent recommendations of the taxation officials, should disregard this silly proposal. Its fit and proper place is the waste-paper basket. It will give' satisfaction neither to the employee nor to the employer, and will not be productive of very much revenue. Men permanently employed by municipal councils are presumed to pay their taxes with clocklike regularity; if they do not, there is an easy way of getting at them. Employees also of such bodies as shipping companies and the like - permanent hands - may be easily traced: and, if the Commonwealth officers cannot find them, they might apply to the State officials, when those gentlemen, perhaps, would be willing - for a small consideration - to supply a list of their own taxpayers. Who are the people whom the Government are anxious to get at under this provision?So far as I can see, its operation will be confined exclusively to men who are unable to secure permanent employment; but who may be receiving more than *£100* a year if they are unmarried, and more than *£156* a year if they are married. There are other ways of collecting taxation due from such persons. When the grocer, butcher, and baker can collect their debts a Commonwealth Department should be able , to collect taxation. {: .speaker-KUL} ##### Senator Millen: -- The honorable senator allows them to collect by this very method. {: .speaker-KMP} ##### Senator GRANT: -- They could not collect by this method in New South Wales, as **Senator Millen** would know if he were a grocer. However, the honorable senator has neve followed any occupation of that kind, and, therefore, does not know what he is talking about. There are other provisions in the Bill providing excellent machinery for the collection of taxation, and such pains and penalties for its evasion as to make the person who fails to pay it sorry for his neglect, if he is caught. In the circumstances, this innovation is entirely unnecessary. It was never introduced on the initiative of the Government. The draftsman who framed the measure was, no doubt, given some indication by the Government that some permanent officials held a picnic somewhere, and drew up a report, and that it would be wise to incorporate their suggestions in this measure. In my opinion, the Government would be wise to look through the report of the Conference of Taxation Commissioners, set aside what is useless and silly in it, and adopt only such suggestions as are really beneficial. {: .speaker-KUL} ##### Senator Millen: -- That is what the Government have done. {: .speaker-KMP} ##### Senator GRANT: -- They would be well-advised, in the meantime, to drop this proposal. I promise them that, if they do not, it will lead to considerable trouble, not only in one State, but throughout the Commonwealth. *Income Tax* [30 May, 1918.] *Assessment Bill.* 5259 {: #debate-12-s9 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia -- If I entertained any doubts as to the pernicious nature of this clause, they have been dispelled by the remarks of **Senator Crawford,** who told the Committee that if employees did not pay their taxes the employers would have to pay more. That is an indication of what is really behind this clause. SenatorCrawford. - If a number of people escape taxation, it follows that those who pay taxation must pay more. {: .speaker-JXJ} ##### Senator NEEDHAM: -- I agree with the honorable senator that the employers of theCommonwealth are powerfully organized. I assume that he spoke from the stand-point of the employer. {: .speaker-JRW} ##### Senator Crawford: -- 'The honorable senator may do so. {: .speaker-JXJ} ##### Senator NEEDHAM: -I speak from the stand-point of the employee, and I venture to remind **Senator Crawford** that the employees of Australia are also powerfully organized. Mention was made of the Australian Workers Union by **Senator Grant,** and **Senator Crawford** acquiesced in the statement. that employers are in the habit of deducting from the wages due to their employees who are members of the Australian Workers Union the amount of their contributions to that union. But in that case the employee consents to what is done. This is a different proposal altogether. {: .speaker-K5R} ##### Senator Senior: -- 'Things that are different are not the same, are they? {: .speaker-JXJ} ##### Senator NEEDHAM: -- There is this very important difference : that the people whom this clause will affect have not been consulted. {: .speaker-JRW} ##### Senator Crawford: -- Yes, they have, because they have been given an alternative, whichthey have refused. {: .speaker-JXJ} ##### Senator NEEDHAM: -- They have not been consulted about this method of collecting taxation from them. There is, therefore, a clear distinction between the two cases. Apart from the question of an employee evading his legal obligations {: .speaker-K5R} ##### Senator Senior: -- Would the honorable senator assist him in that evasion ? {: .speaker-JXJ} ##### Senator NEEDHAM: -- I have already distinctly said that I do not encourage any man or woman to break the law. I believe that every citizen of Australia should be called upon to obey every legitimate law of the Commonwealth. But in this case there is one individual in the community singled out for special treatment, and that is the employee. {: .speaker-JRW} ##### Senator Crawford: -- The honorable senator has not read the whole clause. {: .speaker-JXJ} ##### Senator NEEDHAM: -- I have, or I would not be occupying the time of the Committee. {: .speaker-K5R} ##### Senator Senior: -- Is a person receiving a pension an employee ? {: .speaker-JXJ} ##### Senator NEEDHAM: -- Perhaps **Senator Senior** wishes to read the clause. **Senator Crawford** has said that considerable expenditure will be incurred if this provision is not agreed to. We have a very fine Department in the Income Tax Department. I will not say that it is a costly Department, because I believe that every penny spent in paying the staff is well spent. But I do say that if the Department cannot make every citizen obey the taxation laws there must be something; wrong with its machinery. {: .speaker-K18} ##### Senator Bakhap: -- I do not know that that is an absolutely logical deduction. {: .speaker-JXJ} ##### Senator NEEDHAM: -- It may not be logical, but it is true. {: .speaker-K18} ##### Senator Bakhap: -- There might be something wrong with the machinery of the individual who tries to escape taxation. {: .speaker-JXJ} ##### Senator NEEDHAM: -- I am referring to the machinery of the Taxation Department. I am not discussing the individual. {: .speaker-K5R} ##### Senator Senior: -- Is the honorable senator "stone-walling"? {: .speaker-JXJ} ##### Senator NEEDHAM: -- No; I am humbly endeavouring to induce the Committee to agree with me that this clause is not necessary. If I thought that, in order to protect the revenue of the Commonwealth, such a clause was necessary, there would be no more ardent supporter of it than myself. It has not been found necessary so far. It is merely the introduction of the old pernicious system of the garnishee order. If I am working in any occupation I have so much money to draw as wages at the end of a week, a fortnight, or a month, and I should get that money from my employer. It is what I have earned, and I am legally entitled to it. {: .speaker-KUL} ##### Senator Millen: -- The two things do not necessarily go together. The honorable senator may be legally entitled to a certain wage, but it does not follow that he has earned it. 5260 *Income Tax* [SENATE.] *Assessment Bill.* {: .speaker-JXJ} ##### Senator NEEDHAM: -- I think that throughout my life I have earned more than I have received. {: .speaker-K1I} ##### Senator Barker: -- Even now? {: .speaker-JXJ} ##### Senator NEEDHAM: -- Even now I think I am earning more than I receive. When I have worked for an employer for a week, a fortnight, or a month, I am entitled to receive from him the wages I have earned by that work. If I have not obeyed the law of the land by paying my income tax, that is not the business of my employer at all. It is the business of the Government of the country. They have a staff of officers who can deal with me as they have dealt with others. {: .speaker-K1I} ##### Senator Barker: -- They have the Commonwealth police. {: .speaker-JXJ} ##### Senator NEEDHAM: -- Yes, and they may be used for this purpose. Leaving them out of consideration, we have a fully equipped Department of Taxation, and if any man does not pay his income tax the Department should get to work. {: .speaker-KUL} ##### Senator Millen: -- And, do what? {: .speaker-JXJ} ##### Senator NEEDHAM: -- Prosecute the man for evading taxation ? {: .speaker-KUL} ##### Senator Millen: -- What then ? Levy and distress? {: .speaker-JXJ} ##### Senator NEEDHAM: -- Even that has been resorted to before now. {: .speaker-KUL} ##### Senator Millen: -- So the honorable senator advocates levy and distress in preference to this provision ? {: .speaker-JXJ} ##### Senator NEEDHAM: -- What are the officers of the Department going to levy on ? If a man in receipt of wages does not pay his income tax he can and ought to be prosecuted under the law. But I say that no employer should have the right to act as agent for the Commonwealth Government to take from the wages due to a man money which he has earned. Ifhe has not paid the taxation which he should pay according to the law I do not desire to assist him to evade its payment. {: .speaker-K18} ##### Senator Bakhap: -- It is not necessary for the Taxation Department to summon the man as it is for an ordinary creditor. The Department can levy on him at once. {: .speaker-JXJ} ##### Senator NEEDHAM: -- Yes, the machinery is there for the collection of this taxation, and it has been effective up to now. Why, then, should this garnishee system be introduced? {: .speaker-K1I} ##### Senator Barker: -- It is making the employer a small debt collector. {: .speaker-JXJ} ##### Senator NEEDHAM: -- Yes, it is. **Senator Crawford** has already said that without this provision the employer might have to pay more taxation. {: .speaker-JRW} ##### Senator Crawford: -- The honest employees will have to pay more also. {: .speaker-JXJ} ##### Senator NEEDHAM: -- I have yet to learn that dishonesty is more rampant in the ranks of the employees than in those of the employers. I hope thatSenator Crawford does not desire any honorable senator to adopt that line of argument. If he suggests that there is more dishonesty in the ranks of employees than there is in the ranks of employers- {: .speaker-JRW} ##### Senator Crawford: -- I have never made any such suggestion. {: .speaker-JXJ} ##### Senator NEEDHAM: -- I am glad to hear that. I wish to discuss the matter without heat. But there is in this clause a reflection on employees. {: .speaker-JRW} ##### Senator Crawford: -- There is just as great a reflection upon employers in the next proposed new section. {: .speaker-JXJ} ##### Senator NEEDHAM: -- If that be so I shall be glad to assist **Senator Crawford** to remove it. My whole contention is that we already have the necessary machinery to enable us to follow every citizen who is either intentionally or unintentionally evading the law ? ConsequentlyI fail to see the necessity for the retention of this clause, and I shall vote against it. {: #debate-12-s10 .speaker-KMP} ##### Senator GRANT:
New South Wales -- If this clause be passed, before a workman will be able to secure employment he will be required to produce to his prospective employer a receipt for the payment of his income tax. {: .speaker-KUL} ##### Senator Millen: -- Nothing of the kind. {: .speaker-KMP} ##### Senator GRANT: -- That is exactly what will happen. Now an employer does not want to be troubled in that way. Other things being equal, if two men present themselves for employment, the employer will naturally give a preference to the individual who has paid his income tax. The other applicant for work may have such a small income that he is not required to pay the tax. The employer will not be aware of this fact, and merely because he cannot produce a receipt for the payment of the tax he will be prevented from procuring employment. I do hope that the Government will recognise that they are on the wrong track, and will abandon this proposal. {: #debate-12-s11 .speaker-K1J} ##### Senator PRATTEN:
New South Wales -- 1 am in considerable difficulty in regard to this clause. It certainly possesses some advantages, but many objections can also be urged against it. There is a good deal in what has been said as to the undesirableness of imposing on employers what must be a nauseating duty. On the other hand, there are admittedly scores of thousands of taxpayers throughout Australia who are escaping their just obligations to the Taxation Department. It has occurred to me that if a compromise can be effected, under which this clause will not become operative until after notice has been given both to the employer and employee, it will, to some extent, meet the objections which can be urged against it. {: .speaker-KUL} ##### Senator Millen: -- The honorable senator will have noticed that there is an amendment projected by the Government on those lines. {: .speaker-K1J} ##### Senator PRATTEN: -- I heard of that amendment just now after I had already drafted an amendment myself. During the course of the debate, something has been said regarding the absence of objections to this clause on the part of organizations of employers. To my own knowledge, there has been considerable objection urged to the clause by associations of employers, and also by the general public. I quite recognise the difficulty with which we are confronted, and I shall be glad to see a compromise arrived at on the lines I have suggested. {: #debate-12-s12 .speaker-K5R} ##### Senator SENIOR:
South Australia -- I cannot see that proposed new section 50a will prove of any service whatever to the Taxation Department. Indeed, in view of the fact that there is a far rr.ore reaching provision immediately following it, I fail to recognise the necessity for retaining proposed new section 50a. It seems to me that if we agree to the latter, and we also adopt proposed new section 50b, we shall be incorporating in the measure redundant provisions. {: .speaker-K1J} ##### Senator Pratten: -- We have not reached proposed new section 50b yet. {: .speaker-JRW} ##### Senator Crawford: -- Oh, yes, we have. {: .speaker-K5R} ##### Senator SENIOR: -- I think that we may well eliminate proposed new section 50a if we intend to agree to proposed new section 50b. {: #debate-12-s13 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- I do not see that any material limitation will be imposed upon the measure if the suggestion made by **Senator Senior** is accepted. But if it be adopted a. further modification will require to be introduced. Proposed new section 50a refers not merely to a " person," but also to various bodies. It will be seen, therefore, that if **Senator Senior's** suggestion be adopted, it will be necessary to provide for the inclusion of these authorities in 50b, in addition to the word " person." If **Senator Senior** will move in the direction he has indicated, I shall raise no objection to the amendment at this stage. But if, after consultation with the Taxation Commissioner, I find it necessary to review that amendment, I shall come down and ask that the clause be recommitted. Amendment (by **Senator Senior)** proposed - >That proposed new section 50a be left out. {: #debate-12-s14 .speaker-K1J} ##### Senator PRATTEN:
New South Wales -- I understand that we are now asked to vote for the elimination of all the provisions contained in this proposed new section with a view to subsequently recasting proposed new section 50b. I hope that when we are dealing with the latter provision, some attention will be given to the suggestion which I have made in regard to notice. {: #debate-12-s15 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia -- The amendment of **Senator Senior** goes a long way towards meeting my objection to this provision. But having gone so far in that direction, I wish to know whether we cannot postpone the entire clause' with a view to recasting it *1* Then when the Minister comes down with a reconstructed clause- {: .speaker-KUL} ##### Senator Millen: -- I cannot reconstruct proposed new section 50b until I know the mind of the Committee in regard to proposed new section 50a. {: .speaker-JXJ} ##### Senator NEEDHAM: -- That ls a reason why the whole clause should be postponed. Amendment agreed to. {: #debate-12-s16 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- I would now suggest to **Senator Senior** that after the word " person " in the first line of proposed new section 50b, he should move for the insertion of words corresponding to the terms employed in line 2 off *the* proposed new section which has just been deleted. *0* **Senator SENIOR** (South Australia) J4.18].- I will do that. I move- >That after the word "person" where first occurring in proposed new section 50b, . the following words be inserted : - " local authority, corporation, board, commission, or body". **Senator GRANT** (New South Wales) J4.19]. - The elimination of proposed new section 50a was a step in the right direction But the moment that step had been taken, **Senator Senior** proposed, on the advice of the Minister in charge of the *Mill,,* to include in the next proposed new section the only vital words that were contained in the provision which has. just been deleted. It is mow proposed to make proposed new section 50b read - Where the Commissioner is of the opinion nhat a person, local authority, corporation, board, commission, or body in receipt of income ls liable to pay tax ... And so on. Why? The proposed section becomes merely a duplication of the one> already struck out by the Committee. The only difference I see is that the agent failing to obey it will not be liable to a fine of *S5~* tut I have no doubt that, later on in 4he Bill, we shall find that .a higher fine *than £5* is 'awaiting him if he fails to carry the instructions of the Commissioner into effect. As the Committee has already thrown out half of the clause, She proper course is to throw out the rest «f It, including **Senator Senior's** amendment. Question - That the words proposed to *h&* inserted be inserted - put. . *Honorable senators having taken sides four a division,* {: #debate-12-s17 .speaker-K5V} ##### The CHAIRMAN (Senator Shannon: -- -There being only one aye, I declare the amendment negatived. {: #debate-12-s18 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation. · New South Wales · NAT -- Some little explanation is due to yourself, sir, for what may appear to have been rather a strange development. The fact was that **Senator Senior,** acting on my suggestion, moved the insertion of the winds after the word " person," in the second line of the proposed new section. *Ma* should have moved for their insertion in Kbe seventh line. I discovered the mistake* at an opportune moment. It is now open 'for **Senator Senior** to move the insertion of the words in the right place. Amendment (by **Senator Senior)** put - , That after the word " person," where third occurring, in proposed new section 50b, the words " local authority, corporation, board, commission, or body " be inserted. The Committee divided. AYES: 17 NOES: 11 Majority 6 AYES NOES Question so resolved in the affirmative. Amendment agreed to. {: #debate-12-s19 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- I ask the Committee to pass the clause as amended; but, in order to make it complete, provision should be made that the Commissioner shall be called on to serve notice both on the body required to act as agent and on the defaulting taxpayer. As I am always strongly disinclined to draft amendments on the floor of the Senate, I ask the Committee to pass the clause now, on the understanding that later a new clause will be brought down to make the necessary provision for such notice. {: #debate-12-s20 .speaker-K1J} ##### Senator PRATTEN:
New South Wales -- In redrafting the clause, some qualification is necessary. The clause makes it obligatory on the person owing the money to deduct such a sum " as the Commissioner may assess." The assessment may be a guess or a wrong assessment. The provision, as amended, will be comprehensive, and, to a large extent, cover the four sub-sections which the Committee has struck out, and must be qualified in the direction I suggest, otherwise the Commissioner will be in an autocratic position and able to demand any sum he may assess, although in excess of what should be paid. {: #debate-12-s21 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- That would not happen- provided the taxpayer presented his return in due form. It would only operate in the case of defaulting taxpayers, in regard . to whom we must leave the Commissioner some freedom of action. A taxpayer who is doing his duty can only be assessed in one way. If a taxpayer refuses to furnish any particulars at all, he can only blame himself if the assessment, made up by the Commissioner, is in excess of the proper amount. His alternative is to put himself right by furnishing " a .return. {: .speaker-JRW} ##### Senator Crawford: -- But will not such a taxpayer have the usual recourse, and be in the same position, under the general provisions of the Bill, as those who make returns ? {: .speaker-KUL} ##### Senator MILLEN: -- If a man failed to send in a return, and was assessed by the Commissioner, he would only have himself to blame if the assessment .were excessive. {: #debate-12-s22 .speaker-K1J} ##### Senator PRATTEN:
New South Wales -- Suppose a taxpayer is trying to evade his obligations, and the Commissioner, in assessing him, fixes on an exorbitant amount. As far as I can see, this provision will impose a liability upon an employer to collect the amount, although it be exorbitant. This is a point which, I think, should receive further consideration by the Minister when he is reviewing the clause. {: #debate-12-s23 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- I point out that if the Commissioner draws up an assessment for a defaulting taxpayer, and it is regarded as excessive, the taxpayer will have the right to approach the Commissioner and secure a correction, of the return. {: .speaker-K1J} ##### Senator Pratten: -- Then you will include the notice , {: .speaker-KUL} ##### Senator MILLEN: -- The notice is made another matter now. I am dealing with the question of an excessive assessment which may be made by the Commissioner. In such circumstances, and if a taxpayer demurs, he - may, like any other taxpayer, present his case to the Commissioner, so that he will he under no disability. I ask honorable senators to remember that, after all, we are dealing with defaulting taxpayers. I have sq much sympathy for the taxpayer that I have not much for the man who is trying to evade his tax, and I ask that, fair consideration be given' to the machinery of the Department to compel payments from those people who are trying to evade the obligations placed upon them by the National Parliament. {: #debate-12-s24 .speaker-KMP} ##### Senator GRANT:
New South Wales -- So far as I can understand tha position, it is proposed to include in this provision the whole of the objectionable machinery contained in that portion of the clause that has just been deleted. The fact seems to be overlooked that an employer will have to pay in order to save any further trouble, so it might happen that when a workman goes to collect his wages at the end of a week or a fortnight, he would find nothing coming to him ; but, on the contrary, .there might be a small debit' balance owing to . the demands made by the Department. {: .speaker-KUL} ##### Senator Millen: -- There can be hm» debit balance. The employer can only pay that which he holds in hand. {: .speaker-KMP} ##### Senator GRANT: -- Well, the demands of the Department might scoop up the whole of the fortnight's pay, and as the clause still contains the objectionable features to which I have referred, I propose to ask the Committee to reject it. It is quite an innovation. {: .speaker-KNB} ##### Senator Guthrie: -- No. It is in operation in Queensland. {: .speaker-KMP} ##### Senator GRANT: -- But Queensland is not the whole of the Commonwealth, and as a rule we do not look to that Stats for inspiration in legislative matters, although lately the Government haw© passed a few good measures that might even be adopted by the Commonwealth Parliament. The mere fact that a retrogressive objectionable Parliament in Queensland incorporated a. provision «if this kind in the State Act is no reason why this Government should include a similar proposal in the measure now before the Committee. It does not exist, so far as I know, in the Income Tax Department of New South Wales, and *tss>* have 'been assured on very good authority 5264 *Income Tax* [SENATE.] *Assessment Bill.* that the Commissioner in that State can collect income taxation in a manner which some honorable senators would be glad 'to see adopted by the Commonwealth Income Tax Department. The clause, to my mind, is a deliberately conceived and direct insult to the whole of the working men of the Commonwealth. It is at them, and them only, that it is aimed, and it isaimed more particularly at those workmen who, on account of the misgovernment to which the Commonwealth and the various States have been subjected, are unable to secure permanent employment. If this provision is incorporated in the Bill employees seeking work will probably be called upon to produce receipts for income tax payment, and their non-production will probably mean a refusal of employment. That is the idea behind this measure. {: .speaker-JRW} ##### Senator Crawford: -- An employer will not be liable for anything until he receives a notice. {: #debate-12-s25 .speaker-KNB} ##### Senator GUTHRIE:
South Australia -- I do not desire to labour the question, but I want to emphasize how inequitably the clause will operate. It is the same as the poll tax in Queensland. {: .speaker-JRW} ##### Senator Crawford: -- No. {: .speaker-KNB} ##### Senator GUTHRIE: -- It is the same thing. I remember that some years ago a ship trading on the Australian coast,but not going. to Queensland, was put off her run and had to remain for three days in Queensland. This rendered the men liable for the tax. When the vessel reached Melbourne the ship owner said that the men would have to pay £1 each. They refused, because they were on Victorian articles, and, as the ship master in Victoria was unable to enforce the Queensland law, the ship-owner had to pay for sixty -two men. The result was, he refused to engage the men again. They were absolutely boycotted. And that is what we are trying to re-enact in this Bill. Take the case of the Union Shipping Company. If that company sent a boat to Australia for a week or a fortnight they would have the right to deduct income tax payment for the whole year from the wages of the men. {: .speaker-JRW} ##### Senator Crawford: -- No. {: .speaker-KNB} ##### Senator GUTHRIE: -- I say that is what this provision means - nothing more and nothing less. I have told the Committee what happened in the case of a ship detained in Queensland. {: .speaker-JXV} ##### Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917 -- It is outrageous I There is absolutely no comparison between the two provisions, andyou know it. {: .speaker-KNB} ##### Senator GUTHRIE: -- Isay that itis virtually the same provision. Because the men refused to pay the Queensland poll tax they were absolutely boycotted, and could not get back into the shipowner's employment again. So far as the Commonwealth is concerned the provision now under consideration may be all right, but I invite honorable senators to consider the position of Commonwealth ships. They may be away for three years, and yet, under this clause, the manager of the Commonwealth line of steamers will have the right to deduct three years' income tax from men who may not have been a fortnight in the Commonwealth during that period. {: .speaker-JXV} ##### Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917 -- What ships are likely to be away for three years? {: .speaker-KNB} ##### Senator GUTHRIE: -- All our Australian ships. {: .speaker-KUL} ##### Senator Millen: -- But the longer an employee is away from Australia the less he will have to pay. {: .speaker-JRW} ##### Senator Crawford: -- If a man is outside territorial waters will he be liable under this Bill? {: .speaker-KNB} ##### Senator GUTHRIE: -- So long as he is under the flag he will be liable. . The Commonwealth Shipping Company is now the biggest concern in Australia, and I remind the Committee that no men are more heavily taxed than seamen. They have to pay every time they sign articles and every time they sign off - whether It be for a week, a month, or three years Now it is proposed to tax them again. I ask the Committee to consider this matter carefully, because what happened under the Queensland law will happen to seamen under this provision. {: #debate-12-s26 .speaker-K5R} ##### Senator SENIOR:
South Australia -- I point out to **Senator Guthrie** that,in paragraph 52a of clause 35, it is provided that the income must be derived in Australia. It cannot be said that a person who may be away from Australia for three years has derived his income in Australia. **Senator Guthrie** must know that a sailor's income would be below the taxable amount. {: .speaker-KNB} ##### Senator Guthrie: -- There are others besides sailors - the mate and the engineer. *Income Tax* [30 May, 1918.] *Assessment Bill.* 5265 {: #debate-12-s27 .speaker-K5R} ##### Senator SENIOR: -- This clause, which is to affect, possibly, hundreds of individuals in the Commonwealth, has to be foregone, according to **Senator Guthrie,** to protect an engineer and a mate on a ship. If persons are liable, then they are taxpayers, and should pay; but if they are not liable, there can be no imposition. Tosuggest that it means drawing in the whole of the seamen all around the Commonwealth is merely straining the argument to endeavour to procure a point. This clause is totally different from that which **Senator Guthrie** has referred to as being in operation in Queensland. This is not a poll tax; it is an income tax. {: .speaker-KNB} ##### Senator Guthrie: -- The point is that the poll-tax left the employer to collect it. {: .speaker-K5R} ##### Senator SENIOR: -- The honorable senator must see that it is necessary to have some such provision where there are many persons coming into Australia for a very brief period, and where there are others constantly changing their addresses, so that it is difficult to ascertain really where they are. Since **Senator Guthrie** would not endeavour to evade taxation himself, I plead that he should not try to shelter others who are liable and desire to evade it. All who are liable should pay taxation. If they demur, the Commissioner has a perfect right to use legitimate means to see that they do. While the clause may have its faults, it meets what I can see is an exceptional difficulty. {: #debate-12-s28 .speaker-KNB} ##### Senator GUTHRIE:
South Australia -- I have no intention to assist anybody to evade his just dues. But I have cited a specific instance. If the Union Steamship Company's men, who are liable to taxation in New Zealand, are employed in these waters, this clause will provide an opportunity to tax them also in Australia. {: .speaker-K5R} ##### Senator Senior: -- No. How? {: .speaker-KNB} ##### Senator GUTHRIE: -- It gives an opportunity for taxing the crew of a ship. I am not speaking of seamen; I refer to the crew, from the master to the cabin boy. {: .speaker-K5R} ##### Senator Senior: -- A cabin boy would not receive enough pay to come within the' ambit of taxation. {: .speaker-KNB} ##### Senator GUTHRIE: -- How does the honorable senator know? The point is that it would trouble the whole crew. {: .speaker-KOS} ##### Senator Henderson: -- How can you read that into this clause? {: .speaker-KNB} ##### Senator GUTHRIE: -- I have already put it that, in a certain instance, a ship left Melbourne, and was in Queensland for three days, and, under its poll tax- {: .speaker-K5R} ##### Senator Senior: -- This is not a poll tax. {: .speaker-KNB} ##### Senator GUTHRIE: -- I am not saying it is, but that it leaves the employer to collect. {: .speaker-K5R} ##### Senator Senior: -- When things are different they are not the same. {: .speaker-KNB} ##### Senator GUTHRIE: -- Things are not different here. The employer can deduct from the men's wages whatever he likes. And, in the Queensland instance which I have cited, because the men refused to pay and the law of Victoria upheld their refusal they were boycotted forever afterwards by that company. SenatorFoll. - What company was that? {: .speaker-KNB} ##### Senator GUTHRIE: -- One of the six steamship companies in Australia. If the Commissioner of Taxation sees that one of the Union Steamship Company's vessels - registered in New Zealand - has made a couple of trips on our coast, between Sydney and Melbourne, he may take steps to require the company to collect from the crew the income derived for the year. {: .speaker-K5R} ##### Senator Senior: -- They could not do it. {: .speaker-KNB} ##### Senator GUTHRIE: -- That was the case in Queensland. It was for the year. {: .speaker-K5R} ##### Senator Senior: -- It could not have been a poll tax, then. It must have been an income tax. {: .speaker-KNB} ##### Senator GUTHRIE: -- It was a poll tax. {: .speaker-JXV} ##### Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917 -- And this is an income tax. {: .speaker-KNB} ##### Senator GUTHRIE: -- And it leaves the employer to collect. If the Commissioner says, " Here is the assessment for this ship; the employers will pay it, seeing that they can deduct it from the wages of the men "- SenatorFoll. - The men have always the right of appeal. {: .speaker-KNB} ##### Senator GUTHRIE: -- They have no opportunity. In the Commonwealth Government vessels a man signs articles for 5266 *Income Tax[SENATE.] Assessment Bill.* three years. Meantime, the Commissioner approaches the manager of the Commonwealth line- {: .speaker-KUL} ##### Senator Millen: -- Do you mean that they are out of Australian waters for three years? {: .speaker-KNB} ##### Senator GUTHRIE: -- Yes. {: .speaker-KUL} ##### Senator Millen: -- Then they are not payers of Australian income tax. {: .speaker-KNB} ##### Senator GUTHRIE: -- Yes; the territory carries the flag, the flag carries the territory. They are still Australians, still on Australian territory, while under the Australian flag. Those men may be taxed in their absence. {: .speaker-KUL} ##### Senator Millen: -- They are not taxed in their absence. {: .speaker-KNB} ##### Senator GUTHRIE: -- Not yet. {: .speaker-KUL} ##### Senator Millen: -- And they will not be. {: .speaker-KNB} ##### Senator GUTHRIE: -- If we pass this, yes. {: .speaker-KUL} ##### Senator Millen: -- That is not so. {: .speaker-KNB} ##### Senator GUTHRIE: -- The income is earned in Australia. {: .speaker-JYF} ##### Senator Earle: -- They cannot pay if they are away for three years. {: .speaker-KNB} ##### Senator GUTHRIE: -- They are on an Australian ship, and while it flies the Australian flag it is part of Australian territory. We may be assured that the Commissioner of Taxation will raise the question very quickly in the case of men earning money from the Australian Government, on Australian territory, while on board an Australian ship. We have recognised all through that every ship, no matter where she is, maintains her own flag and the nationality of that flag. An American ship lying in Melbourne to-day is part of American territory. We have no control. The Imperial Government have no control over American, or Norwegian, or other vessels from other countries which are in our waters to-day. {: .speaker-JRW} ##### Senator Crawford: -- Has not the Shipping Board refused to allow them to sail unless they take certain cargoes ? {: .speaker-KNB} ##### Senator GUTHRIE: -- No. But the Board has said, " Without a permit you shall hot go." {: .speaker-JRW} ##### Senator Crawford: -- A nice distinction ! {: .speaker-KNB} ##### Senator GUTHRIE: -- To leave the employer to collect the income tax is a vicious principle, and one we should not agree to. Question - That the clause, as amended, be agreedto - put. The Committee divided. AYES: 17 NOES: 10 Majority . . . .7 AYES NOES Question so resolvedin the affirmative. Clause, as amended, agreed to. Clauses 33 and 34 agreed to. Clause 35 - >After section 52 of the principal Act, the following sections are inserted: - " 52b. In the case of cash prizes in lotteries, the Commissioner may, if he considers it necessary for the protection of the revenue so to do, appoint the person liable to pay a cash prize in a lottery as agent for the person entitled to receive the prize, and may call upon the agent to pay income tax at such rate as is declared by the Parliament: > >Provided that the agent shall not be entitled to any of the deductions allowed under this Act." **Senator McDOUGALL** (New South Wales) [5.6]. - I desire to protest against the proposal to take a certain amount by way of taxation from cash prizes in lotteries. I intend to movethat the proposed new section 52b be left out, as a protest against the inconsistency of the Government in proposing to derive revenue from a prohibited business. We make a citizen of the Commonwealth a criminal if he indulges in the purchase of a sweep ticket in order to gain a prize in a lottery. We refuse to permit citizens of the Commonwealth to address directly the promoters of sweeps in Hobart. If they desire to do so, they must do it " under the lap." If, in the opinion of the Government, it is necessary to raise *IncomeTax* [30 May, 1918.] *Assessment Bill.* 5267 revenue from gambling, my advice to them is that they should take over the whole business of gambling from one end of the Commonwealth to the other. They might, if they did so, secure a substantial amount of revenue. When they propose to recognise gambling sweeps by taking a percentage of the prize money by taxation, they should go the whole way, and make the business legal, and control it. The Government are very inconsistent in submitting this proposal, or they are exceedingly hard up, when they feel called upon to adopt such a means to obtain a very small amount of additional revenue. As a protest against the inconsistency of the Government in attempting to raise revenue in this way, I move - >The the proposed new section 52b be left out. {: #debate-12-s29 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- Whatever may be the merits of the point raised by **Senator McDougall,** they are not affected by the proposed new section 52n. It deals only with the machinery for collecting the tax, and does not in any way impose it. It does not make a single prize winner in Tattersall's sweeps liable to taxation. That is done elsewhere. What the proposed new section provides is that, instead of taxing the recipient of a prize directly, the Government may direct the controllers of such an institution as Tattersall's to take the amount from their prizes and pay it into the Treasury. The provision is intended to protect the revenue. If the proposed new section is left out, the Commissioner of Taxation will still have the right to assess the recipients of prizes in lotteries. If **Senator McDougall** desires to move in the direction of denying the Commonwealth Treasurer the right to participate in lottery prizes, he will not attain his object by the rejection of this provision, but by amending the law which makes these prizes assessable as a part of a man's income. {: #debate-12-s30 .speaker-KMP} ##### Senator GRANT:
New South Wales -- This is another departure from the Commonwealth method of taxation. This is an attempt to tax income at its source. If the Government propose to abandon the present method of taxation of the individual, it is better that they should do so in a straightforward way. There is ample machinery at their disposal to insure the collection of this taxation under the system adopted for the Commonwealth. That being so, they would do well to abandon the proposed new section, which will be merely another pitfall in the way of the taxpayer. The provision does not make it mandatory on the part of the Commissioner of Taxation to compel sweep or lottery promoters to pay income tax on the value of the prizes they distribute. He may not do so. If the provision were mandatory, people wouldknow how they stood; but, under this provision, they may come to the conclusion that it would be quite right for them not to include in their income returns money received from lotteries. In other clauses of this Bill we impose heavy penalties upon those who make mistakes in their income tax returns, and the effect of this provision will be to mislead taxpayers. Most people, unfortunately, do not draw very much from these lotteries, and that is, perhaps, one of the worst phases of the business. The proposed new section will lead to a misconception of their duties on the part of the taxpayers, and I think the Government would be wise to withdraw it, and continue to collect the revenue as at present from taxpayers, in accordance with the returns of income furnished by them. {: #debate-12-s31 .speaker-KTD} ##### Senator McDOUGALL:
New South Wales .- The Minister for Repatriation **(Senator Millen),** in his reply, has only made the case for the proposed new section worse than it was. He is proposing to make the gambler a tax collector by permitting him, for the purpose, to take money belonging to another person. Although the proposed new section does not affect the taxation of these lottery prizes, it does affect the method by which the winners of prizes are compelled to pay taxation. The Government have in this matter always had the law to appeal to, and it has been appealed to. There was acase not long ago of a man who was prosecuted for not having paid the tax in respect of a prize of *£100* or *£200,* and he was compelled to pay up. That is the remedy for the Taxation Department; but, for God's sake, do not make the gambler a tax collector for the Commonwealth. I strongly protest against that. {: #debate-12-s32 .speaker-JYR} ##### Senator FAIRBAIRN:
Victoria -- There is a good deal to be said against the proposed new section 52b: I remind 5268 Income *Tax* [SENATE.] *Assessment Bill.* honorable senators that a person who pays into a lottery is not allowed to deduct his payments as working expenditure, although they represent money spent with the desire to make income. Would the Minister for Repatriation consent to the investments in these lotteries being included in deductions as reasonable expenditure by the taxpayers? {: .speaker-KUL} ##### Senator Millen: -- The honorable sena tor is becoming humorous. {: .speaker-JYR} ##### Senator FAIRBAIRN: -- It is a very debatable point whether such a deduction should not be allowed. -I believe that, under the law, anything may be deducted which is money spent to earn the taxable income. I have no doubt that Senators Grant andMcDougall, when they go into one of these lotteries, do so, like myself, with a desire to make a bit out of it. {: .speaker-KMP} ##### Senator Grant: -- The honorable senator proposes that taxpayers should be allowed to deduct what they pay into these sweeps? {: .speaker-JYR} ##### Senator FAIRBAIRN: -- Yes. I think the Department might very well allow the deduction of such payments. {: .speaker-KUL} ##### Senator Millen: -- Because the honorable senator pays a tax on a theatre ticket, would he claim the right to deduct the price of the ticket from his income ? {: .speaker-JYR} ##### Senator FAIRBAIRN: -- The position is not the same. I do not spend money on a theatre ticket with any idea of increasing my income; but, however they may gloss it over, those who invest money in Tattersall's sweep do so with the idea of adding totheir income. There is no doubt that this provision is farcical. I suppose that a considerable amount of revenue is raised by this taxation, and in these days we cannot afford to do without revenue, even if it be derived from a doubtful source. We know that, in connexion with the shows run on behalf of Red Cross and other appeals, Monte Carlo is brought into Collins-street. Exactly the same kind of thing goes on in the principal streets of this city as goes on in the gambling saloons of the Continent. {: .speaker-KMP} ##### Senator Grant: -- The money is still in the country. {: .speaker-JYR} ##### Senator FAIRBAIRN: -- That does not justify gambling. {: .speaker-KMP} ##### Senator Grant: -- It should, from the point of view of the orthodox Protectionist. {: .speaker-JYR} ##### Senator FAIRBAIRN: -- I do not agree with the honorable senator. I think that it is a very bad thing indeed for the community that our people should contract the habit of gambling. {: .speaker-JRW} ##### Senator Crawford: -- This provision should discourage gambling by reducing the prizes. {: .speaker-JYR} ##### Senator FAIRBAIRN: -- If anything should discourage gambling it is the number of people who continually invest in Tattersall's sweeps and get nothing out of them. I suppose that some revenue is derived in this way, and that, in these times, is held to justify this proposal. {: #debate-12-s33 .speaker-KNN} ##### Senator GUY:
Tasmania .- I have always understood that, from its inception, the Federal Parliament has discouraged gambling. Under the law, the Post and Telegraph Department has refused to carry articles connected with gambling. In hundreds and, perhaps, thousands of cases people have been prosecuted for receiving orders for tickets in sweeps drawn in Tasmania. This course has been followed since the inception of Federation, and the public believe that the law of the Commonwealth is against gambling. It is most inconsistent of this Parliament to have a law discouraging gambling and to now propose to tax the very thing that the law declares to be illegal. I have no sympathy with such a proposal, and must oppose it. {: .speaker-JU7} ##### Senator de Largie: -- Still the honorable senator represents the only State in which the Commonwealth law against gambling is defied. {: .speaker-KNN} ##### Senator GUY: -- That is so, but I never missed an opportunity when in the Tasmanian Parliament of letting the public know that I was an uncompromising opponent of gambling. It is known to every one who is acquainted with me in Tasmania that that is the position which I have always taken up. **Senator Millen** has said that the proposed new section 52b provides merely the means for the collection of taxation, but I am not sure that there is not more than machinery in this provision. I presume that up to now the man who won a prize in any lottery was subject to income tax in respect of it if his income was over a certain amount. {: .speaker-KUL} ##### Senator Millen: -- No; irrespective of the amount of his income. He has to pay taxation on the prize, whatever it is. {: .speaker-KNN} ##### Senator GUY: -- Then I stand corrected; I thought it was otherwise. {: .speaker-KUL} ##### Senator Millen: -- But we cannot always find him. {: .speaker-KNN} ##### Senator GUY: -- And, therefore, the Government desire to make use of those running a gambling show as agents to collect this taxation. {: .speaker-KOS} ##### Senator Henderson: -- It is the only way in which it can be done, because no one wins a' Tattersalls sweep in his own name. {: .speaker-KNN} ##### Senator GUY: -- .There are scores of men who do not pay income tax, and yet they are not chased in the way here proposed. I enter my protest against this very inconsistent provision. There is some justification for the position which has been taken up by certain individuals that if we are going to tax. the moneys invested in Tattersalls, we ought also to run those sweeps. {: .speaker-K18} ##### Senator Bakhap: -- Why should we forbid the Post Office to be used as an agency for sending applications for tickets in Tattersall's, and then tax that institution ? {: .speaker-KNN} ##### Senator GUY: -- That is the position which I have already put. This Parliament will be acting very inconsistently if it taxes a form of gambling that it has already declared to be illegal. **Senator Fairbairn** is apparently prepared to justify almost any means by which we can gain revenue. But I hope we shall never indorse a principle of that kind. {: #debate-12-s34 .speaker-K18} ##### Senator BAKHAP:
Tasmania -- I shall vote without any hesitation against the proposal to levy taxation on lotteries such as Tattersall's. For a long time, I could not quite understand why Continental peoples are accustomed to levy against the British race the charge of hypocrisy. But it is in matters like that which we are now discussing that we seem to justify such criticism. There has been a good deal of Pecksniffianism exhibited in regard to Tattersall's. I should not like to be the Tasmanian legislator who had to undertake the task of finding the revenue that State would sacrifice by the abolition of this institution. I believe that it amounts to about £70,000 annually. The Commonwealth does its level Best to check the stream of investment towards this particular lottery. I do not regard a lottery of this character as an immoral form of gambling. Indeed, of all the forms of gamb ling with which I am* acquainted - and I am acquainted with a good many - the lottery business is the least immoral. No man knocks off his employment to invest in Tattersall's. He merely sends along his 5s. or 6s. for a ticket, and the matter then passes from his mind until the time arrives when he should obtain a result slip. There is no frenzy of gambling about it. It is a cold-blooded investment, which, to a large extent, satisfies the gambling spirit in man. Since the establishment of Tattersall's in Tasmania, other forms of gambling have disappeared. In my youth, I have seen, in certain districts of Tasmania, men playing cards for forty-eight hours on end for very high stakes indeed. But if one goes through those districts to-day, he will find - although greater prosperity obtains there than formerly obtained - that gambling has disappeared. This is due to the fact that Tattersall's supplies a sufficient outlet for the gambling spirit. . Yet the Commonwealth sets its face in the most rigid fashion against this institution. But, although it will not allow the Post Office to be used to enable people to invest In Tattersall's. it is now seriously proposed, and, indeed, the principle is enforced, that when a citizen draws a prize from this lottery, he shall pay taxation upon it. In this connexion, I recall the fate which overtook a man who acted practically as the secretary of a little syndicate, from the members of which hedrew ls. per week, which he forwarded to Tattersall's, for a very long time. Eventually, he gained a £10 prize. He distributed the money amongst the members of the syndicate, and, a little later, as the nominal drawer of the prize, was called upon to pay taxation to the Commonwealth Treasury. That was a hypocritical action. Until we permit those who desire to invest in Tattersall's to send their applications for tickets through the Post Office in a legitimate way, we shall be acting hypocritically if we seek to levytaxation upon the prizes drawn from that, lottery. I will lend myself to no such hypocrisy. I admit that the prizes drawn from Tattersall's would be quite a legitimate subject for taxation if we recognised that form of gambling as an institution, and permitted men to send their applications for tickets through the Post Office without hindrance. I quite agree with" the Acting Prime Minister **(Mr. Watt)** that, in the present financial 5270 *Income Tax* [SENATE.] *Assessment Bill.* exigency, it may yet be necessary to institute something in the way of a State lottery. I do not see any particular harm in that. But I do see harm in men absenting themselves from their employment in order to play cards for high stakes. I fear, however, that I am wandering somewhat from my subject. But I confess that I did experience a certain contempt for the Commonwealth Legislature and the Commonwealth Government when this proposal to tax prizes drawn from Tattersall's was first mooted. I know a man who drew a *£5,000* prize from one of these sweeps. The gain to him was less actual than nominal, because he had laid off *£1,000* of it with the owner of the winning horse. But the Taxation Department called upon him to pay to it no less a sum than *£600.* I saw the receipt for the payment of the tax. {: .speaker-KMP} ##### Senator Grant: -- Did he get a refund? {: #debate-12-s35 .speaker-K18} ##### Senator BAKHAP:
TASMANIA · LP -- Refund ? Why, he was taxed on the amount which he had to pay to the horse owner - a nice state of affairs. {: .speaker-JYT} ##### Senator Ferricks: -- Then he lost by the transaction? {: .speaker-K18} ##### Senator BAKHAP: -- Oh, no! The prize which he won amounted to *£5,000,* and I have no doubt that he would like to have a similar transaction every day in the week. But my point is that it is hypocritical and improper on our part to levy taxation on an institution which we do not legally recognise, and the operations of which we do all that we can to curtail. {: #debate-12-s36 .speaker-JZ9} ##### Senator O'KEEFE:
Tasmania -- This is a very old question. I recollect that within two or three years of the period when the first Senate assembled here, we had under consideration a section in our Postal Act which prohibits people from using the Post Office as a medium to forward money to gambling institutions. Upon that occasion I took up an attitude very similar to that which has been taken up by **Senator Bakhap** today. Although I have never been a " State righter," I stressed the rights of the States then, and I emphasized that the proposal which we were then considering was intended to accomplish indirectly what this Parliament had no power to achieve directly. We have no power under the Constitution to interfere with the forms of gambling that ob tain in any State. Each State - including Tasmania - has its own legalized forms of gambling. The form which is specially legalized in Tasmania is Tattersall's. The provision in our Postal Act to which I have referred, constitutes an infringement of State rights. It infringes the rights of Tasmania, but does not attempt to infringe the rights of other States in connexion with gambling.. When it was under consideration in this Chamber, bookmakers were countenanced! in some States in which the totalizator had not been legalized. In other parts of Australia both bookmakers and totalizator had been legalized. In certain States only the totalizator was recognised, and in others only the bookmaker was allowed to ply his vocation. It was thus entirely within the province of each State Legislature to control the forms of gambling that were carried on within its own State borders. At that time, Tasmania had legalized the totalizator, and also the institution known as Tattersall's. The provision in our Postal Act indirectly sought to crush that institution by prohibiting the public from sending money for tickets through the Post Office. On that occasion, those who knew something of human nature, pointed out that the result of such legislation would be that all over Australia there would spring up a number of illicit institutions - a number of agencies which would break the law, and which it would be impossible to suppress. I am now alluding to agencies which will accept the price of a ticket in Tattersall's from anybody and which - after they have secured a large sum of money - contrive to find some means of forwarding it from the mainland to that lottery. In Tasmania, too, there are similar agencies in every town. In Hobart the public are at liberty to purchase tickets in Tattersall's over the counter. I repeat that the Commonwealth said to Tasmania, "You shall not' carry on gambling in this form." The Tasmanian representatives pointed out that if the Commonwealth desired to be consistent it should lay down the same dictum in regard to every other State of the Union. The Government of that day acted the part of the flagrant hypocrite by inserting this provision in our Postal Act. What has happened since? From that time onward, the volume of business connected *Income Tax* [30 May, 1918.] *Assessment Bill.* 5271 with Tattersall's has not diminished, but has rather increased. It is true that money for tickets cannot be forwarded through the Poet Office. It is breaking the law for any person to send a letter through the post to Tattersall's, which is a prohibited address. Hundreds of reputable business people in Hobart have during the last few years, at one time or another, been put to enormous trouble because they have innocently put into Tattersall's a small amount sent to them by some friend on the mainland or in New Zealand, with a request that, as a personal favour, it should be so invested. These business people have made nothing out of it. They have not acted as agents for a commission, but have simply obliged a friend or customer. As soon as it is discovered that this has been done, I do not say once, but, perhaps, a few times, the Postal Department has gazetted them as prohibited addresses, and, on dozens of occasions, to my knowledge, they have had to get Tasmanian members of the Federal Parliament to intercede for them with the Postmaster-General. {: .speaker-K2L} ##### Senator Reid: -- Have you ever acted as agent? {: .speaker-JZ9} ##### Senator O'KEEFE: -- Never, in the recognised meaning of the word agent, for a commission; but on hundreds of occasions I have complied with the request of a friend, who has sent me a letter, and purchased a ticket for him. In doing so, I have not broken any Tasmanian law. Those business people have been caused tremendous trouble and inconvenience and loss through the Postal Department refusing to deliver letters to them, and members have had to see the PostmasterGeneral, pointing out that those people are not recognised agents, and pleading with the Postmaster-General to remove the prohibition. Dozens of wires have sometimes had to pass between the prohibited person, whose business is suffering, and the Postmaster-General before the prohibition has been removed. All this shows the hyprocisy of the whole business; and now the Government propose to make the promoter of the sweeps the tax-gatherer for them, while, at the same time, declaring in the Post and Telegraph Act that the lottery is illegal. The position is untenable from the point of view of honest legislation, and undoubtedly hypocritical. {: #debate-12-s37 .speaker-KMP} ##### Senator GRANT:
New South Wales -- I understand that those running Tattersall's first annex 10 per cent. of the proceeds to defray the cost of conducting the lottery; then the Tasmanian Government annex another 10 per cent., in order to avoid the necessity of taxing the Tasmanian land-owners. I am informed that they receive £70,000 from that source. {: .speaker-JZ9} ##### Senator O'Keefe: -- It is nearer £150,000. {: .speaker-KMP} ##### Senator GRANT: -- That makes it all the better from the land-owners' viewpoint. The Federal Government take another 10 per cent., making 30 per cent. in all. If the Government are anxious to get more revenue, all they have to do is to amend the Income Tax Act so as to annex 75 per cent. {: .speaker-JXV} ##### Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917 -- Thirty per cent., plus 75 per cent., would be a pretty heavy impost. {: .speaker-KMP} ##### Senator GRANT: -- I am afraid it would be rather too heavy; but I am including in the 75 per cent. the 10 per cent. which the Government now collect. If that were done, there would not be much inducement to run the lottery; but, of course, the Government do not propose to do anything of the kind. What they propose is to depart from the wellestablished custom laid down by the Federal Department of Taxation and ask Tattersall's to pay direct to the Commonwealth the amount that the taxpayer would probably be called upon to pay, although in some cases the taxpayer would probably be called on to pay a good deal more. . {: .speaker-JRW} ##### Senator Crawford: -- More taxation of income at its source. {: .speaker-KMP} ##### Senator GRANT: -- That is so. It is a distinct departure from the Commonwealth method of procedure. {: .speaker-K2L} ##### Senator Reid: -- Is it not a wise one? {: .speaker-KMP} ##### Senator GRANT: -- I do not know that it is. Probably the man receiving one of the higher incomes would welcome it, because he would not have to pay on the 5s. in the £1 rate, but smaller taxpayers, who are sufficiently fortunate to win a prize in Tattersall's - and they all hope to win one by-and-by - would not find it to their 'advantage. The Government can well afford to leave the matter where it stands, and I shall oppose the proposed new section. 5272 *Income Tax* [SENATE.] *Assessment Bill.* Question - That proposed new section 52b be left out - put. The Committee divided. AYES: 11 NOES: 16 Majority . . . . 5 AYES NOES Question so resolved in the negative. Amendment negatived. {: #debate-12-s38 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- I move - >That the following proposed new section be added : - " 52c. Where any income of any person outside Australia is paid into the account of that person with a banker, the banker shall be deemed the person's agent in respect of the money so paid, so long as he is indebted in respect thereof, and shall be subject to the provisions of section 52 of this Act, and entitled to the benefits conferred by that section." We have heard a good deal about the supposed iniquity of making one person who holds money belonging to another responsible for the payment of tax. Here is a provision which applies to another section of the community, placing a similar obligation on the banker to whom money is paid on behalf of an absentee. On receipt of notice, and on compliance with other provisions, the banker is also to be called on to pay on behalf of the taxpayer the money due to the Government. Amendment agreed to. Clause, as amended, agreed to. Clauses 36 and 37 agreed to. Clause 38 - >Section fifty-seven of the principal Act is amended by inserting before the word " Fifty " the words ".Not less than Five pounds nor more than". > > *Section proposed to be amended -* > > *Any person who obstructs or hinders any officer acting in the discharge of his duty under this Act, or the regulations, shall be guilty of an offence.* > > *Penalty: Fifty pounds.* {: #debate-12-s39 .speaker-KMP} ##### Senator GRANT:
New South Wales -- It was explained, I think, in the Senate some time ago that, when reference was made to a penalty, the words " Fifty pounds " did not necessarily mean £50, but that it was the maximum amount permitted to be imposed. Now, however, we find that the Government propose an alteration by making the penalty not less than £5, nor more than £50. I should like to know whether or not the officers of the Crown Law Department were responsible for this alteration ? {: #debate-12-s40 .speaker-KUL} ##### Senator MILLEN:
New South WalesMinister for Repatriation · NAT -- I confess, now that attention has been directed to the clause, I am a little surprised myself to see the alteration in the penalty. However, I understand it has been inserted because ft was approved by the Conference of Income' Tax Commissioners, whose decisions excited much admiration in certain quarters at an earlier stage in the debate on this measure, and which have called forth sharp attacks elsewhere. I understand it was decided that, in the interests of uniformity, the representatives of the Commonwealth should fall in with the proposal. {: .speaker-K1J} ##### Senator Pratten: -- Do you think that is a good reason ? {: .speaker-KUL} ##### Senator MILLEN: -- I do not know. It means that if we get uniformity in this matter we shall be destroying that uniformity which exists right throughout the whole of our Commonwealth legislation, because hitherto we have adhered to the principle referred to by **Senator Grant.** The proposition is there, but I shall not ask the Committee to adopt it under the circumstances. Clause negatived. {: #debate-12-s41 .speaker-KUL} ##### Senator MILLEN:
New South WalesMinister for Repatriation · NAT -- **Mr. Chairman,** may I withdraw that " No " of mine? I find that it has affected the whole clause, and I desire to move an amendment. {: #debate-12-s42 .speaker-K5V} ##### The CHAIRMAN (Senator Shannon: -- The clause has been negatived by the Committee, but it may be recommitted for reconsideration at a later stage. *Income Tax* [30 May, 1918.] *Assessment Bill.* 5273 Clause 39- >Alter section fifty-seven of the principal Act the following section is inserted: - "57a. (1) Any person who fails or neglects to duly furnish any return as and when required by this Act or the regulations or the Commissioner shall be liable to pay by way of additional tax on demand by the Commissioner a sum of One pound for each month or part thereof during which the failure or neglect to furnish the return continues. "(2) The Commissioner may, in any particular case, for reasons which in his discretion he thinks sufficient, remit the additional tax imposed by this section or any part thereof. " (3) If the Commissioner considers that the circumstances of any case warrant ' action being taken to recover the penalty provided by the next succeeding section, such action may be taken by the Commissioner, and in that case the additional tax payable under this section shall not be charged." {: #debate-12-s43 .speaker-KMP} ##### Senator GRANT:
New SouthWales . -I do not know whether or not this is another of those suggestions made by the Conference of Taxation Commissioners. By the insertion of the proposed new section, additional powers will be given to the Commissioner to impose penalties on persons who may simply have overlooked the necessity for furnishing a return. One would imagine that this was a very serious offence; that taxpayers had nothing else to do except to be everlastingly filling in those complicated income tax returns; and that it was quite a simple matter to make up their lists. It is nothing of the kind. It is an extensive, complicated, tiresome, tedious, irritating performance, which is postponed as long as possible, and it is one of those duties which many persons quite innocently overlook. Many people do not pay much attention to parliamentary proceedings, and I have no doubt that many persons who will be liable for taxation under this measure have not the slightest idea that anything of the kind is being enacted bythis Parliament. Under the proposed new sub-section, the Commissioner will have the right to tax any person who fails or neglects to furnish a return the sum of £1 for each month, or part thereof, during which he may neglect to furnish the return. It seems to me that this opens to the Commissioner a very prolific source of income, because all he will have to do will be to say nothing about it until such time as he deems it advisable to remind the taxpayer of his default, and then proceed to collect the penalty I have mentioned. If we were to reverse the position, and proposed to fine the Commissioner £1 for every month during which he failed to notify a taxpayer that his taxation was due, it would not be entertained for one moment. I do not say that there should not be some slight additional tax in a case of default, but I point out that in the management of municipal affairs ratepayers who fail to pay rates within a certain time are liable to some slight punishment, which usually takes the form of an additional 4 per cent. or 5 per cent. on the amount of their rates. This penalty, however, is only imposed on ratepayers whose rates have been outstanding for some time. The way in which municipal rates are collected, with their so-called inferior machinery, is an eye-opener compared with the trouble and inconvenience, and the apparent slipshod manner in which the income-tax gatherers perform their work. Does it not seem strange that a municipality with only one paid officer, and sometimes an assistant, can collect practically every shilling due from year to year, while the Income Tax Commissioner, with a great staff at his disposal, is unable to attain this desirable end? Throughout the whole of New South Wales I suppose there are not anythink like 500 shire clerks, but yet I venture to say that they collect, almost to the last shilling, the whole of the rates due every year, while, as we have been told by **Senator Pratten,** in New South Wales the Income Tax Commissioner is unable to collect, within some millions, the amount that ought to be gathered in. There is something radically wrong. Perhaps it is the basis of taxation. Whether this is so or not, the proposal to give this additional power to the Commissioner will not have my support. {: #debate-12-s44 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia -- I think the Committee might, with advantage, review the clause, because it puts a man in the position of being found guilty before he is tried. Anyone might forget, for various reasons, to furnish a return within the specified time, and in my judgment it is not fair 5274 *Income Tax* [SENATE.] *Assessment Bill.* to say that because a taxpayer may overlook his obligation, he shall be penalized in the manner proposed by the clause. It goes too far, and does not make any allowance for human frailty. I can quite understand that a penalty should be imposed if a man or woman intentionally neglects to furnish a return, but there is no loophole at all in the clause. It simply says that if a man neglects to furnish a returnhe may be penalized.. It might happen that a taxpayer has not the necessary data handy to complete the work. {: .speaker-JRW} ##### Senator Crawford: -- In that case he could apply for an extension of time. {: .speaker-JXJ} ##### Senator NEEDHAM: -- I should like to see some qualification inserted, providing that before any penalty is imposed (there should be evidence of intent to neg- lect to furnish the return. {: #debate-12-s45 .speaker-K1J} ##### Senator PRATTEN:
New South Wales -- We have dealt with the machinery clauses of the Bill, and are now considering the penal provisions, and I must express surprise at their harsh, arbitrary, and autocratic nature. The Leader of the Senate **(Senator Millen)** just now advanced as an argument the suggestion that if any of the Alterations proposed in this Bill were approved by the Conference of State Income Tax Commissioners we should have less hesitation about accepting them than otherwise; but it is interesting to note that the penal provision in this clause is an interpolation entirely by the Commissioner himself. That is to say, in the draft uniform Bill there is no such penal clause as clause 39. To my mind, the whole clause is absolutely unnecessary. There are other provisions that set out *to* penalize the taxpayer if he is late in making his return, or if he fails to do so; and with respect to this and those other clauses, I shall very carefully consider (the matter of placing the Commissioner in an arbitrary position. In view of the unsatisfactory reply from the Minister I intend to move that the clause be eliminated. {: #debate-12-s46 .speaker-K5V} ##### The CHAIRMAN (Senator Shannon: -Order! I point out that there will be no need to move in that direction. The honorable senator may effect the same purpose by voting against the clause. {: .speaker-K1J} ##### Senator PRATTEN: -- I would prefer to move directly. {: #debate-12-s47 .speaker-10000} ##### The CHAIRMAN: -- The honorable senator would be in order in moving in the direction he has indicated; but the same purpose would be served by voting against the clause. {: .speaker-K1J} ##### Senator PRATTEN: -- I shall oppose the clause on the ground that it is unnecessary. {: .speaker-JXJ} ##### Senator Needham: -- On a point of order, did I understand the Chairman to say that **Senator Pratten** could not move for the deletion of a clause ? {: .speaker-10000} ##### The CHAIRMAN: -- The honorable senator did not. {: .speaker-K1J} ##### Senator PRATTEN: -- Then I intend to move for the deletion of the clause, for the reason that the State Income Tax Commissioners have not found it necessary to impose any penal clause such as this. It is giving power to the Commissioner which is autocratic and arbitrary. The penalties are excessive. They would enable the Commissioner to fine a man who received over £156 per annum at the rate of £1 per month. if he did not send in- his return. Suppose it was discovered that an itinerant individual was earning £4 or £5 a week. {: .speaker-KUL} ##### Senator Millen: -- Do you think the Commissioner, or any Commissioner, would, in those circumstances, decline to exercise the discretion given him ? {: .speaker-K1J} ##### Senator PRATTEN: -- I am not prepared to say what any Commissioner would do. I am not prepared to give the power to the Commissioner. I am not saying that the Act is not being administered in a reasonable and just way; but we do not desire to place any more discretion than necessary with the Federal officials. The more we can keep our purposeswithin the ambit of the Bill the better it will be for the Commissioner himself. We should not clothe him with such authority as this and other clauses would confer. {: #debate-12-s48 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia -- Before **Senator Pratten** moves for the deletion of the clause, I shall propose a prior amendment. My suggestion is to insert the word " intentionally." {: .speaker-JXV} ##### Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917 -- Why not fall back on the phraseology of the Act - " knowingly and wilfully " ? {: .speaker-JXJ} ##### Senator NEEDHAM: -- I will accept that. I would prefer such an amendment rather than that the clause be deleted. If it is left out altogether it might open the door to wilful evasion of a duty imposed upon citizens. {: .speaker-K5R} ##### Senator Senior: -- Would you have the penalty the same? {: .speaker-JXJ} ##### Senator NEEDHAM: -- I desire to secure this amendment first, and to determine the penalty afterwards. {: .speaker-K5R} ##### Senator Senior: -- **Senator Pratten** has moved for the deletion of the whole clause. {: .speaker-JXJ} ##### Senator NEEDHAM: -- I understand that he has done so. {: .speaker-10000} ##### The CHAIRMAN: -- The honorable senator merely made a suggestion. I did not take his motion. **Senator Needham** will be quite in order, therefore, in moving his amendment. {: .speaker-JXJ} ##### Senator NEEDHAM: -- I move- >That after the word " who ", line 3, the words "knowingly and wilfully" be inserted. {: #debate-12-s49 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT .-I urge upon the Committee that, if it is not satisfied with the clause, it should leave it out altogether in preference to adopting the amendment. Honorable senators seem to think it was inserted to give the Commissioner some additional horror to wave over the heads of recalcitrant taxpayers. This has been inserted largely in the interests of taxpayers themselves, who have preferred to be fined rather than be dragged into the Courts. If the clause is left out, the Commissioner can fall back upon his redress of prosecuting in the Courts. If the Committee thinks that in no circumstances should a man be permitted by the payment of a small fine to make amends for his breach of the law, well and good; but, there are circumstances under which many people choose to pay a fine rather than be dragged before the Courts. The deletion of the clause will not hamper the Taxation Commissioner very much, but the insertion of the words proposed by **Senator Needham** might do so. {: #debate-12-s50 .speaker-JYT} ##### Senator FERRICKS:
Queensland -- I scarcely think that the case cited by the Minister **(Senator Millen)** constitutes the only alternative. There should be some stipulation regarding the knowledge of the defaulter. He might not furnish a return in time, but he might have no knowledge of his duty in that respect. I know that on one occasion I was a delinquent myself; I was not aware that I had not sent in a return for the year in question. {: .speaker-KUL} ##### Senator Millen: -- Nothing very awful happened to you. {: .speaker-JYT} ##### Senator FERRICKS: -- No ; but the interpretation which might be put uponthe words "knowingly and wilfully"might make the situation hard for a defaulter who had been communicated with bythe Department and had failed torespond through no fault of his own. Thereare many classes of people who are continually travelling, and whose correspondence may be a long while overtaking them. {: .speaker-KOS} ##### Senator Henderson: -- There is always allowance for such cases. {: .speaker-JYT} ##### Senator FERRICKS: -- I wouldnot like to see a person who had no guilty intent placed in an unfair position.I know that, so far as honorable senators are concerned, in the stress of a sustained period of excitement and activity such as the referendum campaigns, income tax returns are about the last things thatare thought of. {: .speaker-KUL} ##### Senator Millen: -- I wish I couldforget mine. {: .speaker-JYT} ##### Senator FERRICKS: -- I forgot for rather too long, and was subjectedto a penalty. I suggest that theamendment is not unreasonable, and that thereshould be some sufficient safeguard for the Commissioner to get into touch with defaulters or negligent taxpayers, so longas the discrimination could be made to apply only to those who were guilty off negligence. But some definition asto wilful knowledge would be also necessary- {: #debate-12-s51 .speaker-KTD} ##### Senator McDOUGALL:
NewSouth Wales -- The amendment does not meet with my approval. My objection to the clause is that it might giveto any one man the power to punish another by a fine. The Minister **(Senator Millen)** states that the clause is toprotect certain persons; but it is a matterof principle. In connexion with the Customs administration there is a similar provision. I am opposed to the principle of conferring upon the Commissionerany more power than he possesses to-day.He holds too much power, so far as I can see; and I shall vote for the deletion ofthe clause altogether, rather than acceptthe insertion of the words "knowinglyand wilfully." {: #debate-12-s52 .speaker-JXV} ##### Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917 -- There are two classes of defaulting taxpayers. There is the manwho, through stress of circumstances, may not bc able at the proper time to send in his return, or who may quite innocently forget to send it in. It may he contended that the amendment proposed by **Senator Needham** will provide a loophole of escape from punishment for the other class of defaulter, who deliberately and defiantly refuses to send in any return. Honorable senators will readily distinguish between the two classes, and while they will agree, that the man who has no intention to send in a return should be punished, they will have no desire to penalize the man who, as the result of a temporary oversight, neglects to send in his return in time. It should 'be remembered that every Commissioner of Taxation, whether of the Commonwealth or of the States, has the power to inflict penalties upon defaulters. There is provision in the State Acts as well as in the Commonwealth law that a taxpayer who does not pay his tax 'before a certain date is liable to a fine. There can .be no objection to this, because its effect is to make the careless more particular. What I a ni concerned about is that every person liable to taxation shall not be placed in the same category with the man who wilfully defies the law. This provision places all in the same category, and that, in my opinion, is not fair. I should at the same time be sorry to see the porvision struck out, because it supplies a necessary safeguard. I think by the insertion of the words " knowingly and wilfully" the Commissioner of Taxation will be placed in a position to meet the case of the taxpayer who is innocently guilty of neglect. We are all disposed to regard the Commissioner of Taxation as a man of iron, who makes no allowance for the defaulter, and we should do well to make him less unpopular. {: .speaker-KUL} ##### Senator Millen: -- Default committed knowingly and wilfully is so difficult to prove that the amendment would practically allow everyone to escape. {: .speaker-JXV} ##### Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917 -- I have no doubt that there are many persons in the community who will deliberately refuse to furnish a return of their incomes. I have no sympathy with them, and am not pleading for them. {: .speaker-KUL} ##### Senator Millen: -- How are we to discriminate between two men, both of whom say that they merely forgot to send in a return? {: .speaker-JXV} ##### Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917 -- It is better that one or two guilty persons should escape than that the innocent should be punished. {: .speaker-KUL} ##### Senator Millen: -- It is better to inconvenience one or two than to permit all who should be taxpayers to escape. {: .speaker-JXV} ##### Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917 -- The main thing is that in the end the tax should be collected, but there should be a loophole of escape from penalties for default for the person who innocently forgets to forward his return. He should certainly be placed in a difficult position from the man who deliberately defies the Commissioner of Taxation. {: #debate-12-s53 .speaker-K5R} ##### Senator SENIOR:
South Australia -- During the progress of the Bill through Committee we have been enlarging its ambit. As a result a very much larger number of persons will require to furnish returns under this measure than have been required to do so previously. Many persons are, therefore, very likely to be quite unintentional defaulters. We are proposing here to doubly penalize, it may be, a quite innocent defaulter. If a man neglects to send in a return he is liable to a penalty, and as he will naturally be late in paying his tax, he will on that account be liable to. a fine of 10 per cent, on the amount of the tax. We are importing into our system of taxation the human element, -and while I do not wish that anything I say should be considered unduly harsh upon the Taxation Department, we may have a Commissioner of Taxation who will exercise his powers in a very harsh way, and as a result a defaulting taxpayer may be doubly and trebly penalized. If we require additional taxation, let us say so, but do not let us make the police court, a medium for collecting taxation. I do not agree with the clause as it stands, because I here are many reasons why a man may fail, without any deliberate intent, to comply with the provisions of the law. Owing to the change in connexion with the collection of taxation from one period of the year to another, I entirely overlooked the fact at the time that r was a taxpayer in South Australia.. When I went to the office of the Department to pay my land tax, I inquired as to when *Arbitration (Public* [30 May, 1918.] *Service) Bill.* 5277 the income tax. would be due, and the reply was, " You should have furnished your return a month ago." There was no intention on my part to be late in furnishing my return. I like to be punctual in such matters. {: .speaker-KNN} ##### Senator Guy: -- I had exactly the same experience. {: .speaker-K5R} ##### Senator SENIOR: -- The date upon which the land tax was due was fixed in my mind, because it happened to be St. Valentine's Day, and when I went to pay that tax I made the inquiry about the income tax. *Sitting suspended from 6.30 to 8 p.m.* {: .page-start } page 5277 {:#debate-13} ### ARBITRATION (PUBLIC SERVICE) BILL {:#subdebate-13-0} #### Second Reading Debate resumed from 23rd May *(vide* page 5019), on motion by. **Senator Needham** - That this Bill be now road a second time. {: #subdebate-13-0-s0 .speaker-KMP} ##### Senator GRANT:
New South Wales -- I shall be very brief in my remarks upon this Bill. It is one which is designed to give to our public servants a very small amount of the justice to which they are entitled. At the present time, if the Arbitration Court gives an award in regard to the plaint of any union connected with our Public Service, it has to lie upon the table of both branches of the Legislature for a period of thirty days after the meeting of Parliament. The object of the Bill is to remove that disability, and to enable the Court to give a decision which will become operative straightway. {: #subdebate-13-0-s1 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia .- This Bill, as I have previously observed, seeks to amend the Arbitration (Public Service) Act 1911, by deleting section 14. Before coming to a vote upon it, I desire to reply to a few remarks which were made by **Senator Millen** in addressing himself to the measure on Thursday evening last. He stated, amongst other things, that the Crown Law authorities bad advised him that the President of the Court had power to make his awards retrospective. If that be so, I have only to say that the President of the Court, who is also a Justice of the High Court, has never, to my knowledge, exercised that power. If I were convinced that under the principal Act he can legally exercise it, a great deal of my objection to section 14 of that Statute would be removed. But he has not, as far as" I know, yet exercised any such power, and knowing as I do that every organization within the Commonwealth Public Service, and registered under the provisions of the Arbitration (Public Service) Act 1911, has suffered on account of that section, I am anxious to remove the disability under which they at present labour. All the organizations of which I have any knowledge have obtained awards of the Court, and, in every instance, whatever benefit they might otherwise have derived from those awards has been vitiated by the delay which has occurred - a delay ranging from one month to five months - before the awards became operative. An entirely different system obtains under the Commonwealth Conciliation and Arbitration Act. Under that Statute, the Judge certainly possesses the power to make his award retrospective, and on more than one occasion he has exercised it. All that I am seeking to accomplish in this Bill is to place organizations within the Commonwealth Public Service upon the same footing as organizations outside of it. In connexion with the latter what happens? A number of men band themselves together as an organization. They submit their claims to the Court, which makes an award. Generally, that award operates at least from the day on which it is given, and it is within the discretion of the Judge to make it retrospective. I fail to see why employees in our Public Service should be treated differently from employees outside of it. The Minister for Repatriation **(Senator Millen)** argued that if this Bill be carried, it will rob Parliament of the control of its own public servants. I say that it is impossible to deprive Parliament of that control. Parliament never loses control of any of its own functions. Even if the measure were carried, Parliament will still exercise the right of review. I repeat that Public Service organizations should be treated in the same way as outside organizations, and when an award is given by the Arbitration Court it should become operative at least from the day upon which it is given. Hitherto that has not been the case. Parliament, perhaps, goes into recess for a period of twoor three months. In the meantme, a plaint by one of these industrial unions 5278 *Income Tax* [SENATE.]Assessment *Bill.* is heard by the Court, and judgment is given. Then the organization interested in that award has to wait until Parliament re-assembles, and the award itself has to lie upon the table of both Houses of the Legislature for thirty days before it can become operative, thus depriving the members of that organization of the benefits conferred by the award for, probably, a period of four or five months. Question - That this Bill be now read a second time - put. The Senate divided. AYES: 8 NOES: 16 Majority ... ... 8 AYES NOES Question so resolved in the negative. {: .page-start } page 5278 {:#debate-14} ### INCOME TAX ASSESSMENT BILL *In Committee* (Consideration resumed from this day, *vide* page 5277) : Clause 39- >After section fifty-seven of the principal Act the following section is inserted : - " 57a. (1) Any person who fails or neglects to duly furnish any return as and when required by this Act or the regulations or the Commissioner shall be liable to pay by way of additional tax on demand by the Commissioner a sum of One pound for each month or part thereof during which the failure or neglect to furnish the return continues. " (2) The Commissioner may, in any particular case, for reasons which in his discretion he thinks sufficient, remit the additional tax imposed by this section or any part thereof. " (3) If the Commissioner considers that the circumstances of any case warrant action being taken to recover the penalty provided by the next succeeding section, such action may be taken by the Commissioner, and in that case the additional tax payable under this section shall not be charged." Upon which **Senator Needham** had moved by way of amendment - >That after the word " who ", line 3, the words " knowingly and wilfully " be inserted. {: #debate-14-s0 .speaker-K5R} ##### Senator SENIOR:
South Australia -- When the sitting was suspended I was pointing out that there were cases in which, conceivably, persons might neglect to furnish a return to the Income Tax Commissioner with justifiable cause. We all know that in Australia very many persons are frequently absent from home for considerable periods, and it is just possible that during their absence letters may arrive for them demanding that they shall immediately fill in their income tax schedules. It is clear, therefore, that a comparatively large proportion of our population may be prevented, by absence, from furnishing returns within the prescribed period. A comparatively large proportion of the population are prevented from complying with the requirement to send in returns, although: they are not unwilling to do so. I am not speaking of those who are persistently determined not to comply with the law. Seeing the heavy fine imposed for failure in this case, it is incumbent on. the Department to prove wilful or intentional neglect. Even a fine of £1 might represent 50 or 100 per cent. of the tax, and it is also objectionable to have a cumulative penalty of £1 for each month, or part thereof. The penalty is out of all proportion tothe offence. I agree that all persons liable to be taxed should furnish a return, but when penalties are to be imposed, the Department must furnish some proof that defaulters have been communicated with, and have failed repeatedly to comply with the law. In addition to this penalty the man will be necessarily late in paying his tax, and so will incur an additional fine. The clause is a sweeping innovation, and I. do' not remember anything equal to it in any other Act we have passed. The Minister should consider whether it does not give almost unlimited power to the Taxation Department. I shall support the amendment, which will be a modicum of comfort, but I should like to see some alteration made in the amount of the penalty.. {: #debate-14-s1 .speaker-KUL} ##### Senator MILLEN:
New South WalesMinister for Repatriation · NAT -- If the Committee is disinclined to adopt the clause, it would be better to strike it out *Income Tax* [30 May, 1918.] *Assessment Bill.* 5279 altogether rather than accept the amendment, which reduces it to an absurdity or nullity. It! half-a-dozen men stand up and say they forgot, or something happened at home, it is impossible for any human being to say which of the six is telling the truth, and which is not. No power on earth can prove whether a man did a thing knowingly and wilfully, or innocently. {: #debate-14-s2 .speaker-KMP} ##### Senator GRANT:
New South Wales -- This is a new provision, and unnecessary, and sure tocause a great deal of trouble and annoyance. There is ample provision in a later clause to give the Commissioner more than enough power in this direction. I propose to ask the Committee to strike out the clause altogether. {: #debate-14-s3 .speaker-KNN} ##### Senator GUY:
Tasmania .- I have great diffidence in putting on the statute-book anything that will impose a hardship upon the people, and particularly that will inflict punishment on the innocent. There seems ample room for innocent people to be punished under a clause such as this. People are expected to obtain forms themselves, and thousands overlook the fact. I have done so myself until a notification in the press has reminded me. {: .speaker-KTD} ##### Senator McDougall: -- Thousands do not know how much they earn. {: .speaker-KUL} ##### Senator Millen: -- If you leave everybody free to put in returns or not, very few returns will be put in. {: .speaker-KNN} ##### Senator GUY: -- We do not want that, but we do not want it made possible for innocent persons to be fined. Unfortunately, we have heard a number of imputations that it is the working classes that try to evade a tax. My experience is that it is mostly propertied classes that do so. {: .speaker-KUL} ##### Senator Millen: -- Then why try to shield them? {: .speaker-KNN} ##### Senator GUY: -- I have no wish to do so. I simply wish to protect the innocent. I know a wealthy lawyer who never makes up his own income tax return. Some time ago he was out of his State, andthe person who acts for him was trying to get into communication with him, because the time for sending in returns was nearly up. At last, he received a reply giving certain particu lars, but the information was not satisfactory. {: .speaker-KUL} ##### Senator Millen: -- What was to prevent him from obtaining an extension of time from the Commissioner? {: .speaker-KNN} ##### Senator GUY: -- I am not at all sure that that request by some one other than the taxpayer would be entertained. The result was that the employee was not able to make up the return until after the time had expired. I have known people who, through sickness, have overlooked the necessity of sending in a return. Under this clause they might be fined. A great number of people do not understand what is expected of them. Only a few days ago a man was under the impression that he had not to send in a return under the State Act because he had a dependant. He received a demand from the Commissioner, and a notification that he would be fined. I put the case to the Deputy Commissioner, and got him off. Under this clause, thousands of innocent offenders can be fined, and I am loath therefore to see it made law. {: .speaker-K2L} ##### Senator Reid: -- How are you going to keep people up to the scratch? {: .speaker-KNN} ##### Senator GUY: -- The next clause will provide all the power necessary to prevent imposition. {: #debate-14-s4 .speaker-K1J} ##### Senator PRATTEN:
New South Wales -- After closely comparing the various proposals for penalizing persons who do not send in returns, I am forced to the conclusion that the drafting officers and departmental officials have rather overreached themselves. If the original proposal agreed to by the Commissioners for a fine of £1, or 10 per cent. of the tax, whichever is the greater, had been inserted in the Bill, I believe there would not Have been the objection that has been raised to this drastic penalty. {: .speaker-KUL} ##### Senator MILLEN:
NEW SOUTH WALES · FT; ANTI-SOC from 1910; LP from 1913; NAT from 1917 -- Then is the objection to the penalty? {: .speaker-K1J} ##### Senator PRATTEN: -- I see that there is a difficulty, and am loath to refuse to clothe the Commissioner with reasonable powers to rake in all erring taxpayers. {: .speaker-KNN} ##### Senator Guy: -- Will not the next clause give him all the power necessary? {: .speaker-K1J} ##### Senator PRATTEN: -- Not quite. I feel myself in somewhat of a difficulty on this matter. It would be almost better to knock the clause out altogether. Had those responsible for drafting the Bill not gone so far with regard to the penal clauses, most of them would have passed through without debate, but we have to consider, not only this clause, but two 5280 *Income Tax* [SENATE ] *Assessment Bill.* others that are even worse. If the Minister **(Senator Millen)** will accept some modification of this provision, and show a sweet reasonableness so far as penalties are concerned, we may get on. {: #debate-14-s5 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia -- I am afraid the Committee are mixing up two things. When I moved the amendment, it was not in mymind to relieve from punishment any one who purposely evaded furnishing a return. Any one who purposely evades that duty should be punished. I wanted to make sure that no one who failed through forgetfulness, and without wilful intent, should be punished. {: .speaker-KUL} ##### Senator Millen: -- How can you prove or disprove that? {: .speaker-JXJ} ##### Senator NEEDHAM: -- Much greater difficulties have been solved. {: .speaker-K2L} ##### Senator Reid: -- The Commissioner will solve it if it is explained to him. {: .speaker-JXJ} ##### Senator NEEDHAM: -- If my amendment is carried, the Commissioner will have a chance to do so. The Minister **(Senator Millen)** suggests as an alternative that the Committee should wipe out the whole clause. I would rather see it wiped out than passed in its present form, but I would much prefer to see it retained with the words I propose to put in. It will assist the Department responsible for the collection of the tax. If we wipe out the clause altogether people will be able to do as they like. {: .speaker-KMP} ##### Senator Grant: -- No. A subsequent clause deals withthem in a drastic manner. {: .speaker-JXJ} ##### Senator NEEDHAM: -- At any rate, I think the addition of the words I suggest would be of great assistance to the Department, and it would prevent any person from being wrongfully penalized. {: #debate-14-s6 .speaker-JRW} ##### Senator CRAWFORD:
Queensland -- If the clause is amended as proposed it will be very difficult indeed to enforce it against anybody. {: .speaker-KUL} ##### Senator Millen: -- It will be impossible. {: .speaker-JRW} ##### Senator CRAWFORD: -- I think, however, it is possible to amend the clause in such a way as to make it less drastic. {: .speaker-KUL} ##### Senator Millen: -- By lowering the penalty? {: .speaker-JRW} ##### Senator CRAWFORD: -- Not that exactly. I think it is the accumulative character of the penalty that is objected to. If, for instance, a man is liable to pay a tax of 10s., but neglects to furnish his return for twelve months, and is fined £12, the punishment will be out of all proportion to the offence. {: .speaker-KUL} ##### Senator Millen: -- Suppose, on the other hand, a taxpayer is liable to pay income tax to the amount of £1,000, and neglects to do so. He may estimate that 5 per cent. on that amount will return him £50 a year, as against a penalty of £12, for failing to furnish his return for the twelve months. {: .speaker-JRW} ##### Senator CRAWFORD: -- In that case the punishment would be too light. {: .speaker-K1J} ##### Senator Pratten: -- Quite so. It might be £1 . or 10 per cent. {: .speaker-JRW} ##### Senator CRAWFORD: -- I think we might provide for a penalty of £1, and if, after personal notice a taxpayer continued in his refusal or neglect to furnish the return, the cumulative penalty might be imposed. {: .speaker-K5R} ##### Senator Senior: -- But the taxpayer might not get the notice. {: .speaker-JRW} ##### Senator CRAWFORD: -- It could be done by registered letter. {: .speaker-KUL} ##### Senator Millen: -- The Commonwealth cannot be asked to serve notice on every person in the community liable to pay taxation. {: .speaker-JRW} ##### Senator CRAWFORD: -- I do not mean that. I suggest that the clause be amended so as to provide, at any rate, for £1 in the first instance, without any further penalty, until a taxpayer has received personal notice of his failure to furnish a return. Then it could be made £1 per month. {: .speaker-KUL} ##### Senator Millen: -- That penalty might go on, because it might be impossible to discover a man for two or three years. {: .speaker-JRW} ##### Senator CRAWFORD: -- I think it would be fairly easy to find all persons liable to pay taxation.. More use might be made of the Commonwealth officials for the collection of the income tax. I refer to our postmasters, who have quite a number of duties to perform outside of those connected with the Postal Department. {: .speaker-KUL} ##### Senator Millen: -- May I point out that the Arbitration Court, by its award, has prohibited the use of postal officials for other purposes. {: .speaker-JRW} ##### Senator CRAWFORD: -- I think, however, this is a matter with which Parliament is quite competent to deal. I live in a remote part of the Commonwealth,. and know how absurd it would be to have separate officers performing the various Commonwealth duties in all those outoftheway places. The matter mentioned by the Minister discloses a real, but not an insuperable, difficulty. I think if the clause were amended in this way the objections might be. met- >Any person who fails or neglects to duly furnish any return as and when required by this Act, or the regulations,, or the Commissioner, shall be liable to pay, by way of additional tax, on demand by the Commissioner, the sum of £1, and if, after personal notice by the Commissioner, he continues his neglect or refusal to furnish the return, he shall be liable to a further penalty of fi for each month or part thereof during which the failure or neglect to furnish a return continues. If we agree to **Senator Needham's** amendment, I think we -might as well strike out the clause altogether, as well as almost all the other penal clauses, because, as we have experienced by the operation of regulations under the War Precautions Act, all that will be necessary for a person to do will be to say "that he conscientiously believes his statement to be true, and so everybody would escape the penalty. {: #debate-14-s7 .speaker-JYR} ##### Senator FAIRBAIRN:
Victoria -- It is obvious that we must have either this clause or section 59, which the Bill proposes to amend. Otherwise we shall have no penalty at all for persons failing to furnish a return. I do not think there is a great deal in it either one way or the other. In my opinion the Commissioner can be trusted to act in a common-sense way. I feel sure that if a man inadvertently, and with a decent amount of excuse, forgot the actual date for furnishing a return, the Commissioner would probably pass over the offence. I cannot see how we shall be able to prove anything if we agree to the insertion of the word "wilfully." {: .speaker-KNN} ##### Senator Guy: -- How have we done it in the past? '. {: .speaker-JYR} ##### Senator FAIRBAIRN: -- We have not been able to prove anything in the past. Hitherto, when a man has failed to furnish a return by a stipulated date, he has been fined 10 per cent, on the amount of tax due by him, but the Commissioner has had authority to remit the additional tax or any part of it. This matter had better be left in the hands of the Commissioner. {: #debate-14-s8 .speaker-K5R} ##### Senator SENIOR:
South Australia .- The Minister **(Senator Millen)** recognises the difficulty of proving ' that a man may inadvertently fail to furnish a return, but in this clause he intends to allow the Commissioner to occupy the position of a Judge. He also quoted the case of a taxpayer liable to pay income tax to the amount of £1,000, and showed how the interest on that amount would more than meet the departmental fines; but I point out that included in the section proposed to be struck out is provision for a penalty of 10 per cent. This provision will bear more heavily upon a poor than upon a rich man. Suppose that a man in receipt of £180 a year has several children, with the result that his income is below the exemption limit, but that he loses one child by death, and is brought within the taxable area. If he failed to furnish a return he would be fined £1. The clause, therefore, would bear heavily on him. I think the wisest course would be to strike the clause out altogether, or substitute 10 per cent, instead of £1. **Senator Lt.-Colonel** O'LOGHLIN (South Australia) [8.44]. - I do not know if the proposed amendment is the best way of overcoming the difficulty, but I would like to quote my own experience of the State income tax in South Australia. There is, no notice given the taxpayer. There is" simply an advertisement in the press stating that the returns must be in by a certain date. Last year, when, these notices were published, I was some thousands of miles away on military duty, and the announcements escaped my attention. Some months later, upon my return, I sent in my papers, and explained the circumstances. When my assessment was sent back, however, I was mulct in 10 per cent, on the tax, together with a fine. I protested, and brought the matter under the notice of the Commissioner, with the result that the penalty was remitted; but I still had to pay the 10 per cent, interest. In such a clear case there should be provision for the penalty to be remitted. I find that in section 58 of the Act, which is proposed to be amended, there are the words " Any person .who fails or neglects to send in a return..... shall be guilty of an offence." So, even if the clause is struck out altogether there will still be provision for the punishment of any person. On the whole, with the provision already existing, the best course would be to leave out the clause. I shall vote in that direction. {: #debate-14-s9 .speaker-K2L} ##### Senator REID:
Queensland .- While a number of honorable senators are objecting to the penalty, we all know that the majority of us are more or less careless, and are apt to leave our obligations, to the last possible moment. I do not know what better course can be adopted, seeing that those who have objected to the alleged drastic penalty have proposed nothing more equitable. We know that there is a big loss to the Treasury annually through people neglecting to pay their dues. We should remember the great expense to which the Department is put in its efforts to secure the full amount of taxation due. The simple fact that Federal returns are due on the 30th June of each year should be sufficient for the public. But I think the Commissioner should have the power to spur the public to their duties in this matter. Honorable senators should look at the position from the view-point of the National Treasury. I admit that the sum of £1 per month by way of fine is rather heavy upon a small income; but a penalty should remain, in order to enforce upon the attention of the public a recognition of their responsibilities. I had been considering the proposal to fix a specific date; but the fact would still remain that the public would take advantage of it to' the last possible moment. In Queensland, a month's extension of time may be secured upon communicating with the Commissioner. I believe, also, that under the original Federal Act, if a person requests an extension he may be granted a further term without undue difficulty. Failing a more suitable or equitable proposition, I feel constrained to support the clause, even though it may inflict an unfortunately heavy penalty in certain cases. {: #debate-14-s10 .speaker-KMP} ##### Senator GRANT:
New South Wales -- The taxpayer of small means who fails to make a return under this clause is to be fined £1 per month. That would be considerably more than the amount of his tax, and as the months' fines accrued he would probably have to pay very many times that total. But the individual who is called upon to pay a substantial amount of income tax would find it pay him handsomely to furnish no return at all, but take it out by way of the fine of *£1* a month. One might well ask if the clause has been inserted to provide wealthy taxpayers with an avenue of escape from paying any taxation whatever. All they would be called upon to pay would be the sum of £1 per month; and I should think many of them would adopt that course without a murmur. There are other clauses following this which give the Commissioner more than sufficient power to inflict penalties upon taxpayers who are negligent. What surprises me most is that the fine should have been merely *£1* per month. I wonder that the mathematical brain was not brought to .bear upon the case again, so that some complicated and graduated scale, with any number of kinks and curves in it, could be introduced, which, although no honorable senator could understand it, would probably pass through Committee without protest. Later, after the amendment has been dealt with, I propose to move for the deletion of the clause. {: #debate-14-s11 .speaker-KUL} ##### Senator MILLEN:
New South WalesMinister for Repatriation · NAT , - If honorable senators turn to clause 41, they will note that there is a penalty imposed on those who fail to furnish information; that is, £1, or 10 per cent, of the amount of the assessable tax, whichever is the greater. I suggest that the Committee negative the clause under, discussion, and then' that when attention is given to clause 41 - which applies only to information - we should insert also the words "return or" - thus making the one common penalty apply both to the individual who fails to furnish a return and to him who fails to give information necessary for taxation purposes. That would get over the difficulty raised as to the tax being excessive in one case and not sufficient in another. {: #debate-14-s12 .speaker-K5R} ##### Senator SENIOR:
South Australia -- While the method suggested by the Minister **(Senator Millen)** is one way of getting over the difficulty, in the clause to which he refers the fine set out is £1, or 10 per cent., whichever is the greater. That would still fix the penalty of £1 upon the small man. If the Minister will make it 10 per cent., I shall be prepared to accept that, because it would amount to a light penalty for neglect on the part of the man of small means, and *Income Tax* [30 *May,* 1918.] *Assessment Bill.* 5283 would proportionately affect the person who has to pay a larger tax. {: .speaker-KUL} ##### Senator Millen: -- You might as well strike out the clause altogether. That provision is in the existing law, which has been in operation ever since we passed an Income Tax Bill. {: .speaker-K5R} ##### Senator SENIOR: -- We have not heard anything during the debate to prove that that was insufficient. Does the Minister mean to say that the 10 per cent. tin the existing law was too light a form of punishment for those guilty of negligence? {: .speaker-JU7} ##### Senator de Largie: -- Why not accept the Minister's invitation to wipe this clause out, and then attack the provision when we reach the other clause? {: .speaker-K5R} ##### Senator SENIOR: -- But thencomes the point that the penalty for the other delinquency, while it is sufficient in that instance, is still disproportionate to the fault of failing to furnish a return; and the £1 fine would still fall upon the small man. {: .speaker-K2L} ##### Senator Reid: -- The Minister is wiping it out now, and you will not accept it. {: .speaker-K5R} ##### Senator SENIOR: -- We are told we should beware of the Greeks when they bring gifts. {: .speaker-K2L} ##### Senator Reid: -- You should take what you can get. {: .speaker-K5R} ##### Senator SENIOR: -- Yes; but I still see a difficulty. In accepting the withdrawal here, I do not feel bound to support the insertion of the provision in the later clause, seeing that the person of small means would still be too heavily penalized. SenatorLt. -Colonel O'LOGHLIN (South Australia) [9.0]. - I agree with the suggestion of the Minister to strike out this clause, but I point out that there is a useful provision in the proposed new sub-section 2 which reads - The Commissioner may in any particular case, for reasons which, in his discretion, he thinks sufficient, remit the additional tax imposed by this section or any part thereof. {: .speaker-K1J} ##### Senator Pratten: -- The same provision is in clause 41. {: .speaker-JZC} ##### Senator Lt Colonel O'LOGHLIN: -- Then that meets my only objection to the striking out of this clause. {: #debate-14-s13 .speaker-K1J} ##### Senator PRATTEN:
New South Wales -- **Senator Needham's** amendment is before the Committee, but there have been suggestions that the clause should be struck out. The Minister **(Senator Millen)** has proposed a *via media,* which, I think, should be accepted. This is an extra provision, which has not, so far, appeared in any Act. It seems to me that if the word "returns" is included under clause 41, that will meet the whole case. I trust, in the circumstances,that **Senator Needham** will accept the Minister's suggestion. Amendment negatived. Clause negatived. Clause 40 - Section 58 of the principal Act is amended - {: type="a" start="a"} 0. by inserting in paragraph (a) of subsection (1) thereof after the word " return," the words " or information or give the security required by subsection (3) of section 41 of this Act or to comply with any requirement of the Commissioner under section 50b of this Act"; 1. by omitting paragraph (c) of subsection (1) thereof and inserting in its stead the following paragraph: - *"(c)* makes or delivers a return which is false in any particular or makes any false answer, whether verbally or in writing,"; 2. by inserting in sub-section (1), before the words " One hundred pounds," the words "Not less than Two pounds nor more than"; 3. by inserting in sub-section (2), after the words "paragraph (a)", the words *"or* (c)"; and 4. by adding thereto the following subsection: - "(3) Any person who,, after conviction for an offence against this section, continues to fail to comply with the requirements of this Act, or the regulations, or the Commissioner, in respect of which he was convicted, shall be guilty of an offence and punishable as provided in section 61 of this Act."' *Section proposed to be amended -* *Any person who -* {: type="a" start="a"} 0. *fails or neglects to duly furnish any return as and when required by this Act or the regulations, or by the Commissioner,* or 1. *knowingly and wilfully, makes or de livers any false return or makes any false answer, whether verbally or in writing, in relation to any matter or thing affecting his own or any other person's liability to or exemption from assessment of income tarn shall be guilty of an offence.* *Penalty* £100. {: type="1" start="2"} 0. *A prosecution in respect of an offence against paragraph (a) of sub-section* (1) *may be commenced at any time.* **Senator** PRATTEN (New South 5284: *Income Tax* [SENATE.] *Assessment Bill.* taxpayers with whips, clause 40, if agreed to, is going to whip him with scorpions. I direct attention to the fact that by sub-paragraph *c* of paragraphb of this clause it is proposed that the words " knowingly and wilfully," which are included in the section proposed to be amended, shall be left out. The effect of this amendment will be to put the taxpayer into the position of having to prove his innocence. I heard an honorable senator this afternoon say that the basis of British jurisprudence is that a man is assumed to be innocent until he is proved to be guilty. If this clause is carried as it stands the taxpayer will be assumed to be guilty untilhe can prove his innocence. The clause deals with matters that have to come before a Court, and with penalties up to £100, and I therefore feel very strongly that the words " knowingly and wilfully " should not be omitted from the proposed new paragraph c of section 58. Under this clause, if" a taxpayer makes or delivers a return which is false in any particular, whether he does so innocently, inadvertently, or in any other way, he will become liable to all the pains and penalties which a Court may inflict upon him. In this case it is not a Commissioner, but a Court, that imposes the penalty. I say that before we risk a man's public, private, or commercial reputation in a Court in a matter of this kind, the onus should be placed upon the Commissioner of Taxation to prove that the man intended fraud. The reason put forward for the omission of the words "knowingly and wilfully" is that it is difficult for the Department to satisfy a magistrate or a judge. I am sure that the Government do not desire to obtain revenueby imposing penalties. There are already several penalties provided for. There is a penalty for failing to make a return, for a late return, and for other things, and I direct the serious attention of honorable senators to the effect which the omission of the words " knowingly and wilfully," as proposed by this clause, will have. In the Bill unanimously adopted last year by the Income Tax Commissioners the words "knowingly and wilfully" were retained. They have been deliberately omitted from the measure now before the Committee. I urge upon the Minister for Repatriation **(Senator Millen)** the dire effect which the omission of these words might have were the administration of the law in the hands of an arbitrary Commissioner. We have made many references during the consideration of this Bill to the Commissioner of Taxation, and I am sure he will recognise that they have not been personal, and that the intention has been to refer merely to an official of the Commonwealth. I do not hesitate to say that I do not think the present Commissioner of Taxation would knowingly do an injustice to any taxpayer. But wedo not know who may in future occupy that position. To illustrate my point I may mention that a member of the New South Wales Parliament said to me last Saturday, " What shocking things may happen if you omit the words knowingly and wilfully ' from the Commonwealth Income Tax Assessment Bill. I made up my wife's return a little while ago, and forgot to enclose a certain income from an investment to which she was entitled. I sent in, therefore, a false return." {: .speaker-KMP} ##### Senator Grant: -- I suppose the wife signed it. {: #debate-14-s14 .speaker-K1J} ##### Senator PRATTEN: -- Yes, the wife signed it. This man is a solicitor, and under this clause, if carried as it stands, his wife will be liable to be haled before a Court of law and fined. If we take our own case, some of us leave the making up of our income tax schedules to accountants or secretaries. On their verbal assurance that they are correct, we sign them. If there is anything false in those returns, we have to stand up to it; and under this clause the position and prestige of an honorable senator would be at the mercyof, say, a vindictive official. I do not think that the taxpayers of Australia should be brought before a Court of law until it is proved that they have knowingly and wilfully made false returns. I ask the Minister to consider the importance of the proposed amendment. I repeat that if clause 39 whipped the taxpayers with whips, clause 40 would whip them with scorpions. The proposed omission of the words "knowingly and wilfully " has created in New South Wales a good deal of public discontent. {: .speaker-KUL} ##### Senator Millen: -- Not of public discontent, but of sectional discontent. *Income Tax* [30 May, 1918.] *Assessment Bill.* 5285 {: #debate-14-s15 .speaker-K1J} ##### Senator PRATTEN: -- Of discontent amongst people who have to pay income taxation and who honestly fear that if this clause is carried as it stands they may be found guilty of endeavouring to evade the law, though they had no such intention. {: .speaker-KUL} ##### Senator Millen: -- Can the honorable senator mention any case in which that has happened ? {: .speaker-K1J} ##### Senator PRATTEN: -- No, because the words " knowingly and wilfully " are included in the existing Act. In this clause it is proposed to omit those words, so that the law will be that any person who makes or delivers a return which is false in any particular, or makes any false answer, whether verbally or in writing, will be subject to certain penalties. Under this clause, the Commissioner may drag any taxpayer before a Court, and charge him with making a false return, when he may not have had any intention to do any such thing. I would ask the Minister to see whether some way out of this difficulty cannot be found. If a way out of it satisfactory to the taxpayers cannot be found, I shall personally be prepared to fight this clause to the last ditch. In the meantime, I move - >That the words " knowingly and wilfully " be inserted before the word " makes " where first occurring in sub-paragraph (c) of paragraph *(b).* {: #debate-14-s16 .speaker-JYR} ##### Senator FAIRBAIRN:
Victoria -- I think the amendment entirely reasonable. A man may make a certain statement in a return believing it to be absolutely correct. The Commissioner may disagree with it, and the taxpayer may then be haled before a Court and fined. It may subsequently be discovered on appeal to the High Court that the interpretation of the Department was wrong, and that the view taken by the taxpayer was entirely correct. He will then have been fined for doing something which the Court holds to be correct. This may be an extreme case, but it is one which might very well arise. Where a man innocently sends in any particulars which subsequently turn out to be false, he should not be penalized. The Commissioner of Taxation has the power to reverse the taxpayer's statement of his liability to taxation, and assess him accordingly. That is the proper method for the protection of the Department. If this clause is passed, very great hardship may be inflicted upon taxpayers which may be quite undeserved. By inserting the words ' ' knowingly and wilfully," as suggested by **Senator Pratten,** that may be avoided. {: .speaker-KUL} ##### Senator Millen: -- We could neverimpose a penalty on a man because we could never prove his guilt. {: .speaker-JYR} ##### Senator FAIRBAIRN: -- I fancy that his guilt could be proved. But this is a very different position. A statement may be made in all good faith, and yet, according to the judgment of the Taxation Department, it may be false. The judgment of the Department may subsequently prove to be erroneous, but, in the meantime, the accused may have been punished. I think that this is an exceedingly bad clause to retain in the Bill. I can imagine the case of a woman, who is dragged before the Court on a charge of having made a false declaration, leading to most distressing results. {: #debate-14-s17 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia -- Only a few minutes ago **Senator Fairbairn** argued that it would be impossible to prove whether a man had knowingly and wilfully done a certain thing. {: .speaker-JYR} ##### Senator Fairbairn: -- That was a very different case. {: .speaker-JXJ} ##### Senator NEEDHAM: -- He then contended, along with the Minister, that it would be absolutely impossible to prove whether a man had knowingly and wilfully done something. Yet, now the honorable senator says that it would be quite easy to prove. {: .speaker-K1J} ##### Senator Pratten: -- The one was a case of fraud, whereas the other is an omission to furnish a return. {: .speaker-JXJ} ##### Senator NEEDHAM: -- The Minister himself pointed out that the Department would experience great difficulty in proving whether a taxpayer had knowingly and wilfully omitted to furnish a return. His contention was supported by **Senator Fairbairn.** Yet, now that **Senator Pratten** wishes to insert in this clause the same words, **Senator Fairbairn** says that it will be quite an easy thing to prove. That is the kind of logic which I cannot understand. {: .speaker-K2L} ##### Senator Reid: -- That is the honorable senator's misfortune. {: .speaker-JXJ} ##### Senator NEEDHAM: -- But whether **Senator Fairbairn's** logic be right or wrong I am prepared to support the insertion of those words. I only regret that **Senator Fairbairn** did not support my previous amendment. {: .speaker-K1J} ##### Senator Pratten: -- This is a case of deliberate fraud - a very, very, serious matter. {: .speaker-JXJ} ##### Senator NEEDHAM: -- Was not the other case an equally serious one? {: .speaker-K1J} ##### Senator Pratten: -- Not quite. {: .speaker-JXJ} ##### Senator NEEDHAM: -- Then it is a question of degree? {: .speaker-JZD} ##### Senator Foll: -- Who is to prove that the fraud is wilful? {: .speaker-JXJ} ##### Senator NEEDHAM: -- It is quite easy to prove. The Taxation Department possesses all the machinery necessary to prove it. I am only surprised at some honorable senators slipping from one clause to another, and exhibiting so much inconsistency. {: #debate-14-s18 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- While listening to this discussion I could not help thinking that there is somehow a lack of moral fibre running through the community. Everybody agrees that it is necessary to place certain obligations upon our citizens. But the moment a citizen fails to discharge those obligations, and punishment is hanging over him, everybody appears afraid that that punishment should fall. If we are going to leave it to citizens themselves to determine whether or not they shall discharge their obligations, I venture to say that all ideas of true citizenship will disappear. {: .speaker-JZD} ##### Senator Foll: -- That is true Socialism. {: .speaker-KUL} ##### Senator MILLEN: -- I remember a reference by **Senator Bakhap** to a little episode in the clays following the French revolution. No doubt honorable senators will recall it. My sympathies are not so much with the evil-doer as with those who suffer from his ill-deeds. Nobody desires to punish an innocent person, and nobody wishes a guilty person to escape. But we shall help the guilty person to escape if we place him in such a position that we can never prove his guilt. If the amendment of **Senator Pratten** be adopted, a man charged with an offence may be brought into Court, where he will merely have to hold his tongue to evade punishment. {: .speaker-K1J} ##### Senator Pratten: -- But the Department has been carrying o,u without this clause. {: .speaker-KUL} ##### Senator MILLEN: -- And with ghastly results. When a prosecution is instituted the accused person has merely to take his place in the Court, and decide to hold his tongue. The Department will then have to prove that he has knowingly and wilfully committed an offence. {: .speaker-JRW} ##### Senator Crawford: -- That would be self-evident. {: .speaker-KUL} ##### Senator MILLEN: -- Not at all. **Senator Pratten** has said that the Department should assume the responsibility nf proving the guilt of an accused person. {: .speaker-JRW} ##### Senator Crawford: -- It has to make out a case against him. {: .speaker-KUL} ##### Senator MILLEN: -- And that case is not that the information supplied by the accused was wrong. If we adopt **Senator Pratten's-** amendment it will have to prove that he knowingly and wilfully committed an offence, and so long as he holds his tongue- it cannot prove that. May I point out that this is no new provision in. our legislation. Honorable senators around me were parties to the Australian Industries Preservation Act, in which exactly the same principle is adopted. {: .speaker-JXJ} ##### Senator Needham: -- We are wiser now. {: .speaker-KUL} ##### Senator MILLEN: -- I sometimes doubt it. In that Act it was recognised that where a number of persons banded themselves together for the purpose of forming a trust or combine, it would be impossible to prove that they did so to inflict injury upon Australian industries. Consequently, the onus was thrown upon them of proving that they had no such intent. {: .speaker-JRW} ##### Senator Crawford: -- Here they are not to be allowed to do that. {: .speaker-KUL} ##### Senator MILLEN: -- Yes, but under **Senator Pratten's** amendment the impossible task is thrown upon the Department of proving that a man knowingly and wilfully did a certain thing. {: .speaker-K1J} ##### Senator Pratten: -- Has not the Department instituted any successful prosecutions during the past three years? {: .speaker-KUL} ##### Senator MILLEN: -- The point is, the number of cases in which the Department is convinced that an offence has been committed, but in which it is impossible to prove that it Was committed knowingly and wilfully. Let me now deal with the other extreme. It would possibly be regarded as inequitable if. we assumed the guilt of an accused person. I propose, therefore, to submit an amendment which will largely meet the objections urged by my honorable friends, and which, at the same time, will not leave the Department without some effective weapon' of defence. I have sketched the defendant in Court merely holding his tongue and throwing on the Department the obligation to prove that he has committed an offence knowingly and wilfully. Instead of assuming that he is guilty, I propose to put that man in the position of proving that he did or did not - as the case may be - commit an offence knowingly and wilfully. I propose to insert as sub-section 4 of this clause the following: - >It shall be a defence to a prosecution for an offence against paragraph o of sub-section 1 of this section if the defendant proves that the false particulars were given or the false statement was made through ignorance or inadvertence. The accused is the only person who can prove whether the offence was committed inadvertently or in' ignorance. The prosecution cannot prove it. If he has a good case, under the amendment which I have outlined, he will be enabled to present it to the Court. But, instead of taking his place there and holding his tongue, he will be called upon to give reasons why incorrect statements were made by him. I think that is a very fair half-way house. If a man has deliberately attempted to defraud the revenue, he ought to be punished. The amendment which I shall presently submit will afford him an opportunity to prove that he erred innocently. We have no right to go beyond that. I ask either **Senator Pratten** to withdraw his amendment or the Committee to negative it, so as to allow me to move the amendment which I have indicated. I think that honorable senator j may well regard my proposal as a fair attempt to meet the objections which have been urged by **Senator Pratten** without leaving the Department utterly impotent against those who may seek to avoid the discharge of their obligation's. **Senator GRANT** (New South Wales) [9.291. - The remarks of the Minister **(Senator Millen)** do not deceive me in the slightest degree. {: .speaker-KUL} ##### Senator Millen: -- They were not intended to deceive anybody. {: #debate-14-s19 .speaker-KMP} ##### Senator GRANT: -- They failed to carry conviction, to my mind, that the proposal of **Senator Pratten** is not a reasonable one, and one that should be adopted. **Senator Millen** has stated that the document concocted by the Taxation officers at the Conference between representatives of the Commonwealth and the States ought to be warmly approved. From that document I find that they purposely retain the words ' ' knowingly and wilfully," apparently because they thought it was not necessary to strike them out, and that they could get sufficient power elsewhere to recover all the taxation due. The Minister informs us, if not directly, at least by inference, that the very unsatisfactory and meagre amount of money collected under the Federal income tax is due to the use of those two words " knowingly " and " wilfully " in the Act. He has given no illustrations in support of that statement, and we are entitled to form the conclusion that he is drawing on his imagination. If he produces evidence to show that the revenue has been seriously lessened by the presence of those two words, we may give his proposal more favorable consideration. The proposed new paragraph simply reenacts paragraph *c* in another form, and the Committee would do wrong to entertain the Minister's suggestion. " If **Senator Pratten** is so ill-advised as to withdraw his amendment I shall immediately move it again. One would imagine that there were no fines provided for in the Bill, but clause 40 provides that any person making or delivering a return which is false in any particular, or making a false answer in relation to certain matters, shall be guilty of an offence, and liable to a penalty of £100. That amount is so substantial that the Government now propose to make the penalty " not less than £2 or more than £100." Let me here again express my surprise that they have not put one of those kinking curves into the clause. As the Government are anxious to get the Bill passed, I would suggest to them not to endeavour to depart from the excellent resolutions arrived at in some cases by the Taxation Commissioners in Conference, or to make people liable to heavy fines when they act unwittingly. Very few people, especially those with incomes derived jointly from property and personal exertion, are capable of correctly filling in their own returns, especially if their businesses extend over a number of States, so that under the Minister's proposal most persons of that class could be proceeded against. The Committee should adopt **Senator Pratten's** amendment, which is in' accord with the views of most people who have given the matter any consideration whatever. If the Minister could show us that the revenue had suffered severely by the inclusion of the words " knowingly " and " wilfully " in paragraph *c,* he would be on more convincing ground, t>ut he has not shown that the revenue has suffered even to the extent of *£1.* That being so, the right thing to do is to carry **Senator Pratten's** amendment. {: #debate-14-s20 .speaker-K18} ##### Senator BAKHAP:
Tasmania -- My conception of the functions of the members of this Committee is that it is our duty to act as umpires between the taxpayers and the Taxation Department. While we should be very keen to prevent any opportunity of injustice being inflicted upon the taxpayer, it is, nevertheless, necessary for us to have a full appreciation of the national needs, and of the difficulties which undoubtedly confront the Taxation Department from time to time. It was my intention to vote for **Senator Pratten's** amendment. I say that frankly, because there has been a considerable public outcry against the language of the clause as it stands, but the amendment suggested by the Minister **(Senator Millen)** meets the case. In practice the Commissioner would never be so ill-advised as to bring an action against a taxpayer unless he was convinced that he was really a transgressor in intention. In practice also the same evidence would have to be adduced whether the clause was passed as it stands, or whether the Act was allowed to remain as it is. For the real satisfaction of a magistrate, and to constitute ' an offence in the eyes of the Taxation Department, I take it that the act of the taxpayer would have to be wilfully and intentionally fraudulent. It would be an unheard-of thing if, because a taxpayer made a mistake, the Commissioner came down on him and prosecuted him straight away. A Commissioner so lacking in discretion would not very long maintain his position in the Public Service. At the same time a defaulting taxpayer, really believed by the Commissioner to be an intentional defaulter, should be compelled to make his defence. If the Commissioner really believes that a taxpayer has wilfully and intentionally attempted to falsify his return, he should be in a position to successfully prosecute him. If the taxpayer is not inten tionally fraudulent, he ought not to b© ashamed to enter on his defence, and an innocent man nearly always has a sufficient defence. I shall vote against **Senator Pratten's** amendment with the intention of supporting that which the Minister has foreshadowed. I would point out to the Minister representing the Commissioner ' that the mistakes are not always on one side. I have been giving more attention to our taxation legislation lately than I have done hitherto, and it has dawned on me recently that for two years I have included in my return substantial sums which were not strictly and legally derived from Australian sources. It is my intention at an early date to apply to the Department for a refund. No doubt a good many mistakes have been made in that way. The taxpayer is not altogether as unpatriotic as some people assume him to be. {: .speaker-KUL} ##### Senator Millen: -- Did you make the mistake out of patriotism? {: .speaker-K18} ##### Senator BAKHAP: -- I did it because I thought it my duty as a legislator to make an honest return. I am supposed to know how many shillings make five as well' as the next man, and if I make a mistake of that description there are many other people, perhaps surpassing me in general intelligence, who possibly have made similar mistakes. Income tax legislation is necessarily complex, and I am not sure that, unless one has some knowledge of accountancy, one rightly comprehends the meaning of all the directions in an income tax return. It is not our "duty to be continually attempting to withdraw the taxpayer from the ambit of the Department's operations. It is our duty to give him proper protection, but it is also our duty to see that the national needs, which the Commissioner typifies, are met. So long as they are properly and honestly met, and provision is made for all the exigencies of the case, nothing "more need be said. The proposal in the Bill is a sort of innovation, and I do not like to see the principle of making a charged man prove his innocence creeping into our jurisprudence. The onus ought really to be on the person ' bringing the charge to prove that he is guilty, and this is an innovation in the British system of jurisprudence that ought to be very carefully watched. {: .speaker-K2L} ##### Senator Reid: -- That is taken for granted, is it not? *Income Tax* [30 May, 1918.] *Assessment Bill.* 5289 {: #debate-14-s21 .speaker-K18} ##### Senator BAKHAP: -- The other would have been taken for granted if the clause had been carried. {: .speaker-JRW} ##### Senator Crawford: -- And there was no defence whatever. {: .speaker-K18} ##### Senator BAKHAP: -- That is so. I believe that in practice the Commissioner would not bring an action against a taxpayer unless he honestly believed he was guilty of some fraudulent action, and that the magistrate would not care to inflict a heavy penalty unless he was persuaded that fraud existed. The needs of justice, theoretically and practically, will be met by the amendment foreshadowed by the Minister. I therefore hope that **Senator Pratten,** to whom a great deal of praise is due for the careful application he has given to the measure, will not press his amendment. {: #debate-14-s22 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia -- I am inclined to support the suggestion of the Minister **(Senator Millen)** in preference to **Senator Pratten** 's amendment. There is at least this comfort in it, that the defendant will have a chance to prove his innocence. That is a concession. I admit the need of protecting the revenue, and as the Minister has shown that we have already initiated in other legislation the system of throwing the onus of proof on the suspected party, I feel that he has met the Committee reasonably. In the absence of an amendment such as the Minister has indicated, I should certainly have supported **Senator Pratten.** I am prepared to support the Minister, and suggest that **Senator Pratten** withdraw his amendment. Amendment negatived. {: #debate-14-s23 .speaker-KUL} ##### Senator MILLEN:
New South WalesMinister for Repatriation · NAT -- Before I move the amendment which I indicated just now, I have a prior amendment to make, dealing with the minimum penalty so as not to disturb the uniformity that runs through all our Commonwealth Acts, and I invite the Committee to negative paragraph c, thus leaving the penalty provision in entire conformity with other provisions in Commonwealth legislation. This is a principle which was introduced by the late **Mr. Kingston.** The Acts Interpretation Act makes it quite clear that where a penalty is stated it means the maximum. The principle has met with general approval because of its tendency to simplify our draftsmanship, and I think it a pity now to disturb that uniformity. I move - That paragraph (c) be left out. {: #debate-14-s24 .speaker-K1J} ##### Senator PRATTEN:
New South Wales -- I am sorry that the Minister is springing this on the Committee now, because I believe the Committee has refused to insert the words "knowingly and wilfully." {: .speaker-JXJ} ##### Senator Needham: -- Not yet. {: .speaker-K1J} ##### Senator PRATTEN: -- I understand that the proposal has been negatived. I do not think that after the Minister made his announcement any honorable senators earnestly attempted to do anything further; but now the Minister seeks to alter what is a most vital provision, which states that the maximum penalty shall be £100, and that the penalty shall grade down to £2, according to the enormity of the offence. It is now proposed to strike out paragraph *c,* and the inference will be that as the penalty is stated at £100, the offence must be enormous, because it will go out to the public that the Committee struck out the words fixing the minimum penalty at £2. I hope the Minister will reconsider this matter. {: .speaker-KUL} ##### Senator Millen: -- We have had seventeen years' experience of this provision. {: .speaker-K1J} ##### Senator PRATTEN: -- But I point out to the Minister that these words are contained in the amendment recommended by the Commissioner himself, and I am sure they were taken into consideration by honorable senators when discussing the amendment relating to the words " knowingly and wilfully." {: .speaker-KUL} ##### Senator Millen: -- By striking out the words referred to, a magistrate will be able to impose a fine of even1s. {: #debate-14-s25 .speaker-K1J} ##### Senator PRATTEN:
NEW SOUTH WALES · NAT -- That may be all very well, but the inference will be that the penalty is £100. It is all very fine to talk about the practice laid down during the last seventeen years. What do the magistrates throughout the length and breadth of New South Wales know about that? They will look up the Act, and find the words " penalty, £100," and assume that it means nothing more and nothing less, so they will be in a difficulty. I ask the Minister to let the paragraph stand. {: #debate-14-s26 .speaker-JXJ} ##### Senator NEEDHAM:
Western Australia -- One of the best amendments suggested by the Minister is that now before the Committee, to strike out 5290 *Income Tax* [SENATE.] *Assessment Bill.* the paragraph referred to, because then the penaltywill be not more than £100, but it may be considerably less than £2. If we retain the words a magistrate must inflict a penalty of at least £2, but by striking out the words the minimum penalty may be as small as1s. {: .speaker-JYR} ##### Senator Fairbairn: -- Magistrates have imposed a fine of1s. on many occasions. {: #debate-14-s27 .speaker-KMP} ##### Senator GRANT:
New South Wales -- It may be true that magistrates have imposed fines of only a few shillings, and in no case have they imposed a fine of £100. I fail to see, however, why we should not make the clause easy of comprehension to any person, even of limited knowledge concerning the use of language. It may be quite true that the Acts Interpretation Act makes it clear that a penalty of £100 does not mean £100 at all, but that it may mean only1s. {: .speaker-JRW} ##### Senator Crawford: -- It means not exceeding £100. {: .speaker-KMP} ##### Senator GRANT: -- It does not say so. {: .speaker-KUL} ##### Senator Millen: -- Yes, it does. {: .speaker-KMP} ##### Senator GRANT: -- Even if the Acts Interpretation Act does say that, I would have no hesitation whatever in departing from stereotyped expressions laid down in Acts of Parliament. We are not here to follow precedents of that kind, but for the purpose of making precedents, and I think it would fit the case exactly if the words "not less than1s. nor more than £100 " were inserted. We are assured frequently that magistrates only impose a fine of1s. If it is true that a penalty of £100 means any penalty down to1s., why not say so in the Bill, so as to make it understandable to any one? I give notice thatI will move to strike out the words " Two pounds," with a view to inserting the words " One shilling." {: #debate-14-s28 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- Perhaps I should apologize for stressing the point, but I should like to read section 3 of the Acts Interpretation Act - >The penalty, pecuniary or other, set out - > >At the foot of any section of any Act . . . shall indicate that any contravention of the section , . . shall be an offence against the Act, punishable upon conviction by a penalty not exceeding the penalty mentioned. If any honorable senator turns to any of our Commonwealth Acts he will find that where penalties are provided, the maximum only is stated. For. instance, in the Electoral Act, which I have no doubt, was supported by **Senator Grant,** the penalty for contravention of its provisions is two years' imprisonment. Everybody knows, however, that that does not mean two years' imprisonment, but, as in the case of all other Acts, it is the maximum penalty that can be inflicted. Paragraph *c* is a contravention of a principle that has been incorporated in all our Commonwealth legislation, and for that reason I ask the Committee not to adopt it. Amendment agreed to. {: #debate-14-s29 .speaker-KUL} ##### Senator MILLEN:
Minister for Repatriation · New South Wales · NAT -- I shall now submit the amendment which I outlined some time ago. I move - >That the following proposed new sub-section be added: - "(4) It shall be adefence to a prosecution for an offence against paragraph (c) of sub-section (1) of this section if the defendant proves that the false particulars were given or the false statement was made through ignorance or inadvertence." Amendment agreed to. Clause, as amended, agreed to. Clause 41 - >Section 59 of the principal Act is amended by omitting sub-sections (1) and (2) thereof and inserting in their stead the following subsection : - " ( 1 ) Notwithstanding anything contained in the last preceding section, any person who - > >fails or neglects to duly furnish any information as and when required by this Act or the regulations or by the Commissioner; or > >fails to include any assessable income in any return; or > >includes in any return as a deduction an amountwhich is in excess of that actually expended or incurred by him, shall, if a taxpayer, be liable, except as provided in this section, to pay by way of additional tax an amount of One pound or ten per centum of the amount of tax assessable to him, whichever is the greater, in any case coming under paragraph *(a)* hereof, or, if the case comes under paragraph (b) or (c) hereof, shall be liable to pay, by way of additional tax, the amount of One pound or double the tax which would have been evaded if the assessment had been based on the return lodged, whichever is the greater, in addition to any additional tax which may become payable by him in accordance with section 43 of this Act: > >Provided that the Commissioner may, in any particular case, for reasons which he thinks sufficient, remit the additional tax or any part thereof." > > *Section proposed to he amended -* > > *Notwithstanding anything contained in the last preceding section, any person who fails or neglects to duly furnish any the regulations or by the Commissioner, or fails to include any assessable income in any return shall, if a taxpayer, be liable, except as provided in this section, by way of additional tax to pay an amount of* 10 *per centum of the amount of taa assessable to him in addition to any additional tax which may become payable by him in accordance with section* 43 *of this Act:* > > *Provided that the Commissioner may, in any particular case, for reasons which he thinks sufficient, remit the additional taa or any part thereof.* > > *The Commissioner shall furnish to the Treasurer annually, for presentation to Parliament, a report of all such remissions with . . . a statement of the reasons therefor.* {: #debate-14-s30 .speaker-KUL} ##### Senator MILLEN:
New South WalesMinister for Repatriation · NAT -- Dealing with clause 39, I suggested that it should be left out, and that clause 41 should be made to apply both with respect to returns and to information-. To meet the case which has arisen consequent -on the deletion of clause 39, therefore, I intend to move for the insertion of the words " return or," so that the clause would then read - any person who - (a) fails or neglects to duly furnish any return or information as and when required by this Act .... {: #debate-14-s31 .speaker-KMP} ##### Senator GRANT:
New South Wales -- I desire to move a prior amendment. I am not at all satisfied that the clause is in conformity with the position arrived at in regard to the preceding clause. I wish to insert the word " wilfully " at the beginning of paragraph *a.* The amendment of the Minister is not objectionable, but my proposed amendment should meet with the approval of the Committee, seeing that we desire to protect the prospective taxpayer against what may be an inadvertence on his part. If it was right to accept the amendment to clause 40, it should be right and necessary also to insert a similar amendment here. And the acceptance of my proposed amendment would necessitate a similar amendment in paragraph *b.* I move - >That the word " wilfully " be inserted before the word " fails " in paragraph (a). Amendment negatived. {: #debate-14-s32 .speaker-KUL} ##### Senator MILLEN:
New South WalesMinister for Repatriation · NAT -- I now move - >That after the word " any," line 7, the words " return or " be inserted. {: #debate-14-s33 .speaker-K5R} ##### Senator SENIOR:
South Australia -- Concerning the amendment of the Minister **(Senator Millen),** the minimum penalty of £1, in its application to the man who receives a little over £3 per week, is equivalent to about one-third of that salary for the week. It may not seem much to honorable senators, but it is actually a very heavy penalty upon persons of small means. I agree that there should be some amount of penalty, but previously it was 10 per cent. A fine of £1 would not be too great in the case of failure to furnish information. The Commissioner might require, by way of information, the presentation of a person's books of account, in which circumstance the minimum penalty of £1 would not be excessive. But here we are classing a minor offence with a major offence. {: .speaker-JRW} ##### Senator Crawford: -- The Commissioner has power to reduce the penalty. {: .speaker-K5R} ##### Senator SENIOR: -- If the penalty is fixed at 10 per cent, of the amount for which a person is liable I will support that. ' {: .speaker-K2L} ##### Senator Reid: -- It is £1 or 10 per cent. {: .speaker-K5R} ##### Senator SENIOR: -- But it continues. " whichever is the greater." {: .speaker-K2L} ##### Senator Reid: -- Make it 5s. for the lowest incomes on which a tax is paid. {: .speaker-K5R} ##### Senator SENIOR: -- I would prefer the 10 per cent. Amendment agreed to. {: #debate-14-s34 .speaker-KMP} ##### Senator GRANT:
New South Wales -- I view with some concern the proposal that the minimum fine under this clause should be £1. That is a mere unconsidered trifle to honorable senators on the other side, but it should not be forgotten that men receiving £156 a year, and, if unmarried, men receiving only £100 a year, will come within its operation. They will be liable to a fine of £1 if they fail to fill in their returns correctly, or to furnish information which will enable the Commissioner of Taxation to extract the last penny for which they may be liable under this Bill. It is very significant that in the case of persons in receipt of higher incomes the fine is to be 10 per cent, of the tax payable by them. I hope that the Minister will agree to leave out the words " One pound or," and later on the words " whichever is the greater." If that is done, the small taxpayer will be brought under the same condition as the man who is assessable to a larger amount, and the fine he will have to pay for default under this clause will be 10 per cent, of the amount of his tax. {: .speaker-JRW} ##### Senator Crawford: -- If he is taken before the Court under the preceding clause 5292 *Income Tax* [SENATE.] *Assessment Bill.* he may be fined up to £100. It is optional with the Commissioner to decide which course he will pursue. {: .speaker-KMP} ##### Senator GRANT: -- We may be sure that the Commissioner of Taxation will treat the taxpayer, at least for a first offence, in the most lenient manner. If a man continues to offend, the Commissioner will be justified in using the whole of the machinery of the Act against him. I hope that the Minister- will be reasonable, and will agree that all taxpayers shall be treated alike. I do not care whether the percentage charged as a fine be 5 per cent. or 10 per cent., but certainly a minimum fine of £1 will represent a very heavy penalty upon some persons who will be called upon to pay income tax under this measure. I move - >That the words " One pound or," where first occurring, be left out. If that amendment is agreed to I take it that the consequential amendments which will then be necessary will be accepted without debate. {: #debate-14-s35 .speaker-KUL} ##### Senator MILLEN:
New South WalesMinister for Repatriation · NAT -- In many phases of legislation it is very difficult to submit a proposition which is entirely logical, and which assumes the uniformity of a mathematical proposition. There would possibly be a difference in the percentage penalties proposed by the clause if allowed to pass as it stands; but honorable senators have to bear in mind that there are other things to be considered besides mathematical uniformity. **Senator Grant's** amendment to strike out the penalty of £1, and leave the only penalty which could be imposed, 10 per cent. of the amount of the tax, would confront the Taxation Department very frequently with this position : A man whose tax amounted to £1 would be liable to a fine of 2s. {: .speaker-KMP} ##### Senator Grant: -- And quite enough for him to pay. {: .speaker-KUL} ##### Senator MILLEN: -- But it would cost the Department infinitely more to make him pay it. {: .speaker-KMP} ##### Senator Grant: -- Then it must be worked on very expensive lines. {: .speaker-KUL} ##### Senator MILLEN: -- I should like to know what **Senator Grant** would take to collect amounts owing in sums of 12s. {: .speaker-KMP} ##### Senator Grant: -Why does not the honorable senator propose to let out the job on the contract system ? {: .speaker-KUL} ##### Senator MILLEN: -- I venture to say that **Senator Grant** would not make a living out of collecting 2s. fines under this clause. We must have some regard to the cost thrown upon the Department in the collecting of penalties, not by its own fault, but by the default of the taxpayer. In the circumstances I ask honorable senators to reject the amendment. Question - That the words proposed to be left out be left out - put. The Committee divided. AYES: 5 NOES: 19 Majority ... ... 14 AYES NOES Question so resolved in the negative. Amendment negatived. {: #debate-14-s36 .speaker-KMP} ##### Senator GRANT:
New South Wales .- The refusal of the Minister to accept my amendment was based upon the assumption that it would in certain cases cost more than 10 per cent. to collect a fine of that amount. He urged that a fine of 2s. only upon a defaulting taxpayer whose tax amounted to £1 would not be sufficient to justify the Department in going to the trouble and expense of proceeding against the defaulter. That leads me to believe that the honorable senator does not desire to be unreasonable and to do any injustice to the small taxpayer. I therefore ask him to accept an amendment to strike out the words " One pound," and insert in lieu thereof the words " Ten shillings." {: .speaker-KUL} ##### Senator Millen: -- The Committee has already decided that the words " One pound " shall remain part of the clause. {: #debate-14-s37 .speaker-K5V} ##### The CHAIRMAN (Senator Shannon: -- It will not be in order for the honorable senator to move that the words " One pound " be left out, because the Committee has decided that they shall remain.. *Public Service* [30 May, 1918.] *Examinations.* 5293 {: .speaker-KMP} ##### Senator Grant: -- Then it is a great mistake. {: #debate-14-s38 .speaker-10000} ##### The CHAIRMAN: -- Order ! The honorable senator must withdraw that remark. It is a reflection upon the Committee. {: .speaker-KMP} ##### Senator Grant: -- I express regret that the Committee should have come to such a decision, and if my remark was offensive I withdraw it. Clause, as amended, agreed to. Clause 42 - Section 60 of the principal Act is amended - {: type="a" start="a"} 0. by inserting before the words "Five hundred pounds " the words " not less than Fifty pounds nor more than " ; and 1. by inserting after the word "and" the words " in addition ". Section *proposed to be amended -* *Penalty: Five hundred pounds and* *an* amount *equal to treble the* amount *of income tax which would have been avoided if the income stated in the return had been accepted as the correct income.* {: #debate-14-s39 .speaker-KUL} ##### Senator MILLEN:
New South WalesMinister for Repatriation · NAT . -I am going to ask the Committee to strike out paragraph *a* of this clause, as I do not propose to insert the minimum penalty in conformity with the decision just arrived at by the Committee. I move - That paragraph (a) be left out. Amendment agreed to. Clause, as amended, agreed to. Clause 43 consequentially amended and agreed to. Clauses 44 to 49 agreed to. Progress reported. Senate adjourned at 10.34 p.m.

Cite as: Australia, Senate, Debates, 30 May 1918, viewed 22 October 2017, <>.