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Wednesday, 15 May 2002
Page: 2286

Mr SLIPPER (Parliamentary Secretary to the Minister for Finance and Administration) (11:21 AM) I move:

That this bill be now read a second time.

I rise today to introduce a bill that has already passed through the other place. The Financial Corporations (Transfer of Assets and Liabilities) Amendment Bill 2002 gives effect to extending the sunset clause until 30 June next year for banks obtaining a banking authority in order to be eligible for concessional tax treatment when transferring assets and liabilities. The extension of the sunset clause was announced by the then Minister for Financial Services and Regulation in August last year. The existing concession is provided for in the Financial Corporations (Transfer of Assets and Liabilities) Act 1993; however this concession expired on 30 June 2001. The extension will apply from 1 July 2001 to maintain continuity in the application of the sunset clause and to prevent ambiguity in interpreting the status of transfers since 30 June 2001.

Passage of the bill will also extend the deadline to effect any subsequent transfer of assets and liabilities from 30 June 2004 to 30 June 2006.

The continuation of the concession is consistent with the original intent of the act of helping foreign banks restructure their operations in Australia by enabling certain taxes and charges to be waived on the transfer of assets and liabilities, including tax losses.

When the sunset clause expired on 30 June 2001 there was confusion in the industry due to the uncertain impact of unresolved tax issues relating to thin capitalisation legislation and consolidation legislation. This resulted in foreign banks being uncertain about the appropriate structure for their operations in Australia.

Passage of the bill will enable foreign banks to structure their operations with a clearer understanding of the tax regime. The bill will enable a smooth continuation of business activities resulting in positive flow-on effects to the Australian economy and employment levels.

There is strong support from the banking industry—including the International Banks and Securities Association of Australia, IBSA, and Australian Banking Association, ABA, members—for the bill to be passed as soon as possible in order to give foreign banks comfort in arranging their regulatory status following introduction of the thin capitalisation regime from 1 July this year. Passage of the bill is also supported by the Australian Prudential Regulation Authority, the prudential regulator of banking in this country.

Passage of the bill is consistent with promoting Australia as a centre for global financial services and will enhance its standing amongst the international business community.

I commend the bill to the chamber and present the related explanatory memorandum.

Leave granted for a second reading debate to continue forthwith.