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Commonwealth act
This Act has been repealed and is no longer in force. It is retained for historical reference.
Imposes a special tax on "war-time profits" of businesses that arise after 30 June 1915 and up to the end of the wartime period specified (s.2, s.7). The tax rate is set by Parliament (s.7(1)).
Defines which businesses are in scope and lists specific exemptions (for example, municipal bodies, certain charitable or educational institutions, agriculture and specified primary production activities, certain life‑insurance profits, and particular war‑related new businesses) (s.8). The exemption for an activity applies only to that activity and not to suppliers or purchasers dealing with it (s.8(2)).
Calculates "war-time profits" by (a) determining monthly average profits or losses for accounting periods that begin or end in each financial year (s.7(2)(a)), (b) apportioning those averages to months falling within the financial year (s.7(2)(b)), (c) adding those apportioned amounts and deducting a pre‑war standard of profits (s.7(2)(c)), and (d) allowing a small fixed deduction or scale of deductions in low‑profit cases (s.7(3)). The pre‑war standard and alternative percentage standard mechanics are set out in Part V (s.16).
Adopts the same fundamental profit‑measurement principles as the Commonwealth income tax law, subject to numerous modifications in Parts IV–VI (s.10, s.15). Part IV lists allowable and disallowed deductions (including rules for wasting assets, leasehold expenditures, directors’ remuneration limits, and treatment of bad debts and appropriations to development) (Part IV, e.g. ss.15–16, and specific sub‑sections within s.15).
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Direct links to the current provisions in War-time Profits Tax Assessment Act 1917.
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Requires persons liable to be taxed to furnish returns when called upon by the Commissioner; the Commissioner makes assessments from returns and other information and may make an assessment where returns are defaulted or unsatisfactory (ss.18, 21, 22). Tax becomes a debt due on notification and is recoverable (ss.32, 35). Additional tax and penalties apply for late payment and non‑compliance, with some remission discretion for the Commissioner (ss.34, 55).
Gives the Commissioner broad administrative powers: delegation (s.6(2)), access to books and places (s.51), power to require attendance, evidence and production of documents (s.52), power to make assessments and alter them (ss.14, 23), and limited discretion to modify Parts IV–VI in individual cases (s.11). The Commissioner must report annually to the Treasurer on the Act’s operation and on breaches or evasions (s.6(4)–(5)).
Provides appeal and review pathways: an objection to an assessment (s.28), referral to a Board of Referees for prescribed cases and for Commissioner referrals (s.27), and appeal to courts including specified procedures for rules of court and High Court involvement in questions of law (ss.28–31).
Establishes enforcement rules and criminal sanctions for obstructing officers, false returns, understating profits with intent to defraud, and avoidance schemes; it also voids contracts made to evade tax (ss.49–58). It prohibits artificial or fictitious transactions aimed at avoidance and requires disclosure of prior such arrangements (ss.49–50).
Imposes special representative and safeguarding obligations on companies, agents, trustees, liquidators, and persons holding money for non‑residents, including personal liability in some circumstances (ss.14(3), 46–48). Executors and administrators have obligations where taxpayers die (ss.37–40). A small Board can relieve a taxpayer in serious hardship, bankruptcy or insolvency (s.59). The Governor‑General may make regulations to give effect to the Act (s.60).
Who pays: businesses (including companies, partnerships, and persons carrying on business) that derive profits from sources in Australia and whose profits, when adjusted against a pre‑war standard, produce an excess (s.7, s.8). Agents, trustees, company public officers, and persons controlling funds on behalf of non‑residents can be required to account for or may be made personally liable in certain situations (ss.46–48). Executors and administrators may be assessed on a deceased person’s profits (ss.37–40).
Who decides: the Commissioner administers, assesses, has investigatory powers and specified discretions (s.6, ss.14, 51–52). The Commissioner can refer difficult cases or modifications to the Board of Referees (s.11, s.27). Courts hear appeals under the prescribed process (ss.28–31).
Revenue target and incidence: the tax is expressly on profits in excess of a pre‑war standard (s.7, s.16). That channels payment to firms whose wartime profits exceed their pre‑war baseline; the text makes the Commonwealth the beneficiary by recovery mechanisms and debt treatment (ss.35, 41). The Act therefore changes the post‑war cash flows and net returns of those businesses whose wartime profits exceed their pre‑war norms.
Compliance burden: taxpayers must keep and produce detailed accounts, deliver returns when called upon, and face inspection and compulsory evidence orders (ss.18, 20, 51–52). Companies must maintain a resident public officer and notify the Commissioner of that appointment (s.46). Criminal and civil penalties for failures, false statements and obstructing officers (ss.54–58) increase compliance costs and the need for record‑keeping.
Administrative discretion and implementation risk: the Commissioner has wide powers to assess, alter assessments, delegate functions, allow instalments or extend payment times, remit penalties, and modify Parts IV–VI in special cases (ss.6(2), 11, 14, 23, 33, 34). Those discretions allow case‑by‑case relief but also create reliance on administrative judgment and variation in outcomes across similar taxpayers.
Anti‑avoidance and enforcement mechanisms: the Act voids arrangements intended to alter tax incidence or evade returns and penalises fictitious transactions and understatement with specific fines and additional tax (ss.49–50, 55–57). Those provisions signal an enforcement focus and change the legal effect of tax‑motivated contracts.
Effects on business choices: by taxing excess profits above a pre‑war standard, the Act directly alters the reward to wartime expansion, investment or reallocation of resources. The Act contains adjustments intended to reduce distortions (for example, allowing Commissioner‑approved deductions for exceptional wartime plant or postponement of repairs, and special treatment for recent businesses) but still requires taxpayers to justify and document such claims (s.11, s.12, s.16(6)).
Interaction with existing income tax rules: profits are to be determined on the same principles as Commonwealth income tax subject to the Act’s modifications (s.10). That linkage reduces duplication of legal definitions but imports complexity where special rules override ordinary income tax treatments (Parts IV–VI).
This summary is strictly drawn from the Act’s text and cites the provisions that govern each mechanism.