XN000022-1981-05-27 — Page 7

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WEDNESDAY, MAY 27, 1981

INLAND REVENUE (NO. 2) BILL PASSED WITH AMENDMENTS

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THE FINANCIAL SECRETARY, THE HON SIR PHILIP HADDON-CAVE TODAY (WEDNESDAY) INTRODUCED AMENDMENTS TO THE INLAND REVENUE AMENDMENT (NO. 2) BILL 1981 IN THE LEGISLATIVE COUNCIL.

ONE OF THE AMENDMENTS WAS TO ACHIEVE TWO PURPOSES: FIRSTLY, TO MAKE CLEAR THAT GAINS OR PROFITS ARISING FROM TRANSACTIONS IN CERTIFICATES OF DEPOSIT OR BILLS OF EXCHANGE BE CHARGEABLE TO PROFITS TAX ONLY WHERE THERE ARE GAINS OR PROFITS IN RESPECT OF THE FUNDS OF THE TRADE, PROFESSION OR BUSINESS CONCERNED AND SECONDLY TO GIVE THE COMMISSIONER OF INLAND REVENUE STATUTORY AUTHORITY TO DETERMINE A MARKET VALUE FOR CERTIFICATES OF DEPOSIT OR BILLS OF EXCHANGE AT THE CLOSE OF BUSINESS ON A SPECIFIED DATE, NAMELY, MARCH 31, 1981.

ANOTHER AMENDMENT WAS TO ENSURE THERE IS NO QUESTION OF DOUBLE TAXATION, ONCE UNDER INTEREST TAX AND THE OTHER UNDER PROFITS TAX. THIS AMENDMENT ALSO CATERS FOR THE SITUATION WHERE, EXCEPTIONALLY, THE ACCEPTOR RATHER THAN THE DRAWER OF A BILL OF EXCHANGE RECEIVES THE MONIES ON THE FIRST SALE OR OTHER DISPOSAL OF THE INSTRUMENT.

IT ALSO GIVES STATUTORY AUTHORITY TO THE COMMISSIONER OF INLAND REVENUE TO ENABLE HIM TO ESTABLISH MARKET VALUES FOR CERTIFICATES OF DEPOSIT OR BILLS OF EXCHANGE AT MARCH 31, 1981 SO AS TO REMOVE FROM THE BILL THE ALLEGED ELEMENT OF RETROSPECTIVITY FOR SURPLUSES SUBJECT TO INTEREST TAX, IN THE SAME WAY AS IT HAS BEEN REMOVED IN RESPECT OF GAINS OR PROF ITS SUBJECT TO PROFITS TAX.

IN REPLY TO THE HON DAVID NEWBIGGING'S CALL FOR SOME REASSURANCE TO THE UNIT TRUST INDUSTRY, SIR PHILIP SAID, THE ONLY ASSURANCE HE COULD GIVE WAS THAT UNIT TRUSTS WHICH TRADE IN SHARES INCUR A TAX LIABILITY.

+PERHAPS, HOWEVER, HE AND THE INDUSTRY MAY GLEAN SOME COMFORT FROM THE THOUGHT THAT, IN THE COMMISSIONER'S VIEW, UNIT TRUSTS GENERALLY DO NOT TRADE, ALTHOUGH SOME DO SOMETIMES,+ SIR PHILIP SAID.

HE POINTED OUT THAT ONLY FOUR UNIT TRUSTS HAD BEEN ASSESSED RECENTLY: EACH WAS A PROTECTIVE ASSESSMENT FOR YEARS OF ASSESSMENT WHICH WOULD HAVE BECOME TIME-BARRED, EACH WAS THE SUBJECT OF OBJECTIONS AND IT WAS STILL OPEN TO EACH TO SHOW THAT IT HAD NOT BEEN TRADING IN SHARES.

THE BILL WAS PASSED WITH THESE AMENDMENTS IN THE COUNCIL TODAY,

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