Mr ROSS CAMERON (Parliamentary Secretary to the Treasurer) (10:32 AM) —The Taxation Laws Amendment Bill (No. 5) 2003 makes amendments to the income tax law and other laws to give effect to several taxation measures. Firstly, the bill includes amendments that implement changes to the thin capitalisation regime. The thin capitalisation provisions which commenced on 1 July 2001 ensure that multinational entities do not inappropriately allocate an excessive amount of debt to their Australian operations. The amendments in the bill will ensure that the legislation is consistent with the government's policy intentions and further clarifies aspects of the operation of the law. The measures will assist business in effectively complying with the thin capitalisation measures. The amendments will ease the compliance burden on business while maintaining the integrity of the tax law.

Secondly, this bill amends the Fringe Benefits Tax Assessment Act 1986, from 1 April 2003, so that fringe benefits provided to employees whose duties are performed in or in connection with a public hospital will qualify for the $17,000 capped fringe benefits tax exemption regardless of whether or not the hospital is a public benevolent institution. In addition, the amendments provide that, for the purposes of the fringe benefits tax exemption for remote area housing, a remote area for a public hospital will be one that is at least 100 kilometres from a population centre of 130,000 or more, regardless of whether or not the hospital is a public benevolent institution.

Thirdly, the amendments implement the government's 2001 election commitment to reduce the tax rate on the excessive component of an eligible termination payment—that is, a lump sum from a super fund. The reduction is delivered through a cut in the tax rate from 47 per cent to 38 per cent on the excessive component originating from a taxed source and a reduction in the amounts of contributions which are subject to the superannuation surcharge. The amount of the reduction will depend on the contributions, if any, made by the super fund in the year that the excessive lump sum payment is paid.

Fourthly, amendments in this bill will overcome an anomaly in the tests that apply to companies deducting prior year losses and bad debts written off. Lastly, this bill makes amendments that will allow corporate tax entities to choose the amount of prior year losses they want to deduct in an income year. This will ensure that tax losses are not used up against franked dividend income, which is already effectively tax free by way of the franking tax offset. This measure will ensure that a corporate group is not disadvantaged by the move to the consolidation regime. It is a pleasure to be summing up debate on a bill that will reduce the compliance burden, implement the government's election promises and cut taxes.

The DEPUTY SPEAKER (Hon. B.C. Scott)—The original question was that the bill be now read a second time. To this the honourable member for Kingston has moved as an amendment that all words after `That' be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.

Question agreed to.

Original question agreed to.

Bill read a second time.