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Wednesday, 27 May 2009
Page: 4463

Mr CHEESEMAN (11:08 AM) —The Tax Laws Amendment (2009 Measures No. 2) Bill 2009 is a multifaceted bill covering a wide range of tax related amendments. It looks at the tax amendments to the Financial Claims Scheme, it covers capital gains matters, it covers tax offsets for water desalination projects and it covers issues in relation to the Fuel Tax Act. It also contains assistance measures for small businesses and primary producers affected by the Victorian bushfires, amongst other maters.

Many of these amendments go hand in hand with the measures we have taken to address the global financial crisis. These are measures that essentially give effect to the government’s decisive action in relation to the global financial crisis.

Before I go to some of the detail of these matters, I want to say a couple of things more broadly about the government’s response to the global financial crisis, as it has now been called. It is useful to think about some of the alternative scenarios faced by this nation. Can you imagine what Australia would be like today if we had not taken the decisive response to the global financial crisis we did take? Where would we be? We would be much more like America today, I suspect, if we had not taken such decisive action. America had a weak President, a very much diminished President, when the global financial crisis kicked in. I believe there was some of the lowest polling ever in America’s history as a consequence of that. America’s initial response to the global financial crisis was denial, and then inaction. We can contrast this with Australia’s strong and decisive action under the Rudd government, which this bill in detail reflects. If we had not taken the sort of response that we did under the Rudd government our cities and towns would be much more like many of America’s cities today, where hundreds of thousands of people are losing their jobs and their homes. Under this government’s response, which the detail of this bill backs up, we are creating hundreds of thousands of jobs. Our response has been strong and immediate.

I would like to go through some of the detail and aspects of this bill because they are very important to this nation. First, in relation to the capital gains tax amendment components, under the APRA scheme capital gains and losses arising from rights under the scheme are disregarded, ensuring that the scheme does not trigger capital gains tax consequences that would not have arisen if the scheme had not been applied. In relation to the Farm Management Deposits Scheme, an amount paid under the scheme in relation to the farm management deposits, the FMD, will be treated as a transfer of the FMD for tax purposes and not as a withdrawal of the FMD and the making of a new FMD. This ensures that the scheme will not trigger any tax consequences that would not have arisen if the scheme had not applied.

In relation to the retirement savings accounts, an amount paid under this scheme in relation to a retirement savings account with a failed financial institution into a new retirement savings account with another institution is treated as a rollover superannuation benefit, and I think that is very appropriate. This ensures that the payment is treated the same for tax purposes as if it had been made by the failed institution.

In relation to the first home savers account, an amount paid under the scheme in relation to a first home saver account with a failed financial institution into a new first home saver account with another institution is treated as a transfer between accounts. This ensures that the payment into the new account does not become ineligible for government co-contribution. An account holder’s ineligibility to have a first home saver account is rolled over into the new account and the time to notify a provider or the ATO of the ineligibility is extended so that he or she is neither advantaged nor disadvantaged by any changes in eligibility that occur whilst the existing account with the failed institution cannot be assessed.

There is more detail in relation to this schedule; however, the intent here is to ensure that people are not disadvantaged by the quirks of the taxation system and so ensure that these initiatives are implemented in a fair and equitable way.

The Financial Claims Scheme was enacted in October 2008. The introduction of the legislation for the scheme was brought forward because of the global financial crisis and so was not able to exclude any consequential amendments. In broad terms, it aims to provide the same taxation treatment that APRA makes under the Financial Claims Scheme as would have applied to the payments if they had been made by the failed financial institution or insurance company. Capital gains and losses in relation to rights created by the Financial Claims Scheme are not ignored. Payments in relation to a farm management deposit—(Quorum formed) Clearly, there has been a change of thinking in the tactics committee of the Liberal Party, or at least perhaps a rather spoilt brat running the show.

The DEPUTY SPEAKER (Ms S Bird)—The member will withdraw that comment.

Mr CHEESEMAN —I withdraw. Payments in relation to a farm management deposit, a retirement savings account or a first home saver account will generally have to be made into another account of the same type. This ensures that the normal restrictions on withdrawing amounts from those accounts are maintained. Those payments will generally be treated as a rollover from one account to another to avoid the consequences of them being treated as the opening of a new account. APRA will be subject to the same obligations to withhold amounts from payments, and to the same reporting obligations in relation to the amounts withheld or rolled over, that the failed institution would have been.

Another matter tackled by these amendments is the matter of small business capital gains—of course, very important to my constituency within Corangamite. These amendments to the small business capital gains tax concessions increase access to the concessions for taxpayers owning a capital gains tax asset used in a business by an affiliate or entity connected with the taxpayer and for partners owning a capital gains tax asset used in a partnership business. The main changes were announced in the 2008-09 budget. These amendments had been actively sought by industry, and will be a real help to many small businesses in my own electorate. Corangamite, my own electorate, is based around small business, and I have done a lot of work with small business to find out what their needs are in difficult circumstances. I am pleased to see them get assistance, particularly when we are in such difficult times as we are now.

These amendments will also make a number of additional changes to refine and clarify elements of the existing small business capital gains tax concessions so that they operate flexibly, as of course the government intended. Industry stakeholders expressed support for these measures during consultation processes. A number of stakeholders suggested additional changes to the scope and application for small business capital gains tax concessions. The additional changes were not adopted, as they were beyond the scope of the current amendments and would also lead to more complex provisions or greater compliance costs for taxpayers.

I would also like to say a couple of things about the tax offset component in this bill in relation to urban water and desalination projects. I think it is a very important measure. It will help important water desalination projects get off the ground. The government is providing financial assistance under the National Urban Water and Desalination Plan to improve the security of water supplies to all of Australia’s major cities. This will be achieved by supporting major desalination, water recycling and stormwater harvest projects that will contribute significantly to this end. This measure implements the tax offset component within this plan. Assistance is capped at 10 per cent of eligible capital costs up to a maximum of $100 million per project. Successful applicants which are outside the tax system will receive cash grants instead of tax offsets. The Minister for Climate Change and Water is responsible for approving this assistance, and the plan is administered by the Department of the Environment, Water, Heritage and the Arts. Part of the National Urban Water and Desalination Plan involves funding for stormwater harvesting projects. Additional funding for these projects, as well as relaxed eligibility criteria, were negotiated with Senator Xenophon as part of the passage of the $42 billion stimulus package through the Senate.

This forms part of the government’s Water for the Future strategy and will support initiatives that drive investment in diverse water supply options and encourage industry and the community to save and use water more efficiently. This measure implements the government’s election commitment. Within my own seat, and in the city that I represent, there are two major projects in relation to water recycling. There is the $20 million commitment to Shell, which is a part of federal Labor’s commitment in the federal seat of Corio, and there is a $10 million commitment to the Black Rock recycling plant, which, of course, is very pleasing to my electorate. Most of the other elements which I have not touched on today have been canvassed by numerous speakers, so I will leave it at that. I commend this bill to the House.