The Commissioner of Land Tax has forwarded the following memorandum for advice:

I shall be glad to be favoured with your advice on the following matter.

In pursuance of the law relating to the taxation of leaseholds, landowners throughout Australia affected by the law have been requested to furnish the value of their leased lands on a freehold basis.

As you are aware the tax is applied to the value represented by the capitalised difference for the unexpired term of lease between the rent paid and 4 1/2% of the unimproved freehold value.

It has been brought under my notice by the Deputy Commissioner, Queensland that a circular has been sent out by the United Pastoralists and Grazing Farmers Association, Queensland, to taxpayers urging them to supply as the freehold value an amount arrived at by multiplying the rent by 20. This method would have the effect of leaving free from tax all the leaseholds in Queensland, the holders of which followed the advice.

It is known to the Department that the rentals fixed by the Government in Queensland do not represent, in many instances, 4 1 /2% of the unimproved value, and it is also known that in the case of long dated leases which issued many years ago, there has been a significant increment in value due to the existence of better markets for stock and higher prices for produce.

The effect of the advice tendered is, in my opinion, to prevent the landowners from returning fair values for their lands. So seriously do I regard this that I desire to be advised whether proceedings may not be taken against the persons responsible for sending out the circular in view of the wording of section 73 of the Land Tax Assessment Act which provides that:

Whoever aids abets counsels or procures, or by act or omission is in any way directly or indirectly knowingly concerned in the commission of any offence under this Act, shall be deemed to have committed that offence and shall be punishable accordingly.

Section 69 provides that:

1. Any person who, with intent to defraud, in any return understates the unimproved value of any land, shall be guilty of an indictable offence.

Penalty: Five hundred pounds and an amount equal to treble the amount of the tax which would have been evaded if the value stated in the return had been accepted as the unimproved value of the land; or forfeiture of the land undervalued or any part thereof.

2. Where the value stated in the return is less, by twenty-five per centum or more, than the value as found by the jury, the value shall be presumed, in the absence of evidence to the contrary, to have been understated with intent to defraud.

In my view the Executive of the United Pastoralists and Grazing Farmers Association and Mr A.B., the Secretary of that organisation, have counselled action which amounts to an offence under section 69.

If proceedings may be taken under the section referred to, I should be glad of your advice as to further procedure.

The principal constituent of the main offence is intent to defraud, and in order to obtain a conviction, it would be necessary to prove that the circular was issued with the intention that the Commonwealth should be defrauded.

Prima facie, Mr B. 's action and the action of the Association must be taken to have been done bona fide, and I have very grave doubts whether the Commissioner would be able to prove intention to defraud on the part of Mr B. or the Association.

In my opinion, a prosecution could not be successfully instituted against Mr B. or the Association.

[Vol. 13, p. 364]