XN000022-1987-02-25 — Page 29

WEDNESDAY, FEBRUARY 25, 1987

22

STEPS PLANNED TO COUNTER ASSET REFINANCING SCHEMES

*****

THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, PROPOSED IN HIS BUDGET SPEECH TODAY (WEDNESDAY) THAT SUBJECT TO THE ADVICE OF THE EXECUTIVE COUNCIL SPECIFIC ANTI-AVOIDANCE LEGISLATION BE INTRODUCED TO COUNTER ASSET REFINANCING ARRANGEMENTS WHICH CONVERTED AN INCOME FLOW INTO A NON-TAXABLE CAPITAL RECEIPT.

SUCH LEGISLATION SHOULD APPLY TO ARRANGEMENTS ENTERED INTO AFTER TODAY, HE ADDED.

MR JACOBS SAID THE GENERAL ANTI-AVOIDANCE MEASURES INTRODUCED LAST YEAR MIGHT BE EFFECTIVE IN NEGATING THE PROFITS TAX BENEFIT SOUGHT FROM SUCH ARRANGEMENTS, AND THE COMMISSIONER OF INLAND REVENUE WOULD CHALLENGE CASES WHERE HE CONSIDERED THE PURPOSE OF ANY ARRANGEMENT FELL WITHIN THE TERMS OF THE GENERAL ANTI-AVOIDANCE PROVISIONS.

HOWEVER, HE WAS PROPOSING THAT NEW LEGISLATION BE INTRODUCED BECAUSE THE AMOUNT OF REVENUE. CAPABLE OF BEING PUT AT RISK IS SO LARGE AND SINCE IT HAS ALWAYS BEEN THE GOVERNMENT'S POLICY TO IMPLEMENT SPECIFIC LEGISLATION TO COUNTER SPECIFIC TAX-AVOIDANCE SCHEMES.+

IF LEFT UNCHECKED, THE MATTER COULD RESULT IN A SUBSTANTIAL DRAIN ON PROFITS TAX YIELD, HE ADDED.

MR JACOBS SAID HE WAS AWARE THAT A GROWING NUMBER OF TAXPAYERS WERE ENTERING INTO ASSET REFINANCING ARRANGEMENTS WHICH WERE VARIATIONS ON +MYER+ SCHEMES BY ASSIGNING THE INCOME FLOW TO ANOTHER PERSON WITHOUT ASSIGNING THE UNDERLYING ASSET.

+THE ARRANGEMENTS HAY ALSO INVOLVE EFFORTS TO GIVE INCOME AN OFF-SHORE SOURCE, HE SAID.

MR JACOBS POINTED OUT THAT +MYER+ SCHEMES WERE SO NAMED AFTER AN AUSTRALIAN CASE WHICH HAD BEEN GIVEN WIDE PUBLICITY IN PROFESSIONAL CIRCLES.

TWO CONCESSIONS ON ESTATE DUTY PROPOSED

*****

TWO CONCESSIONS RELATING TO ESTATE DUTY WERE PROPOSED BY THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, IN HIS BUDGET SPEECH TODAY (WEDNESDAY).

TO REDUCE THE INFLATIONARY ELEMENT INHERENT IN THE RISE IN VALUES IN RECENT YEARS, HE PROPOSED REPLACING THE PRESENT SCHEDULE OF RATES WITH A NEW SCHEDULE SCALED FROM 6 PER CENT ON ESTATES BETWEEN $2 MILLION AND $2.5 MILLION TO 18 PER CENT ON ESTATES OVER $5 MILLION.

MR JACOBS