Senator MURRAY(12.37 p.m.) —The Democrats recognise the problem inherent in the government's original proposal for charitable trusts. The Taxation Laws Amendment Bill (No 4) 1997, as introduced into the House, had the potential to prevent funds being distributed overseas, even for missionary or aid purposes. The government corrected this in the House of Representatives but has acknowledged that some trusts might still be picked up. The concern was that the spill would apply from budget night on 22 August 1996, but the draft legislation was not produced until some months later and not introduced into the parliament until June, 1997.

As a result, a number of charitable trusts have apparently distributed funds offshore, without realising or appreciating that such an action would result in their losing tax exempt status. The Democrats have had discussion with the government on this issue and informed the government that we believe the August operative date is unfair and that the bill should rather apply from the beginning of this financial year. The government has now brought that forward as a formal amendment, and I want to record the thanks of the Australian Democrats to the government for taking that action and for correcting weaknesses in the bill. We will be supporting the government amendments fully and, therefore, we would expect Senator Cook's amendment to fall away.

I should point out that a trust does not lose tax exempt status for distributing donations. These measures apply only to income earned by a trust which would otherwise have been assessable. When charitable trusts become aware that distributions overseas can still be made out of donated money, I think that this measure will not occasion some of the concern that it might have occasioned at first glance. The government's bill is, by and large, a very welcome bill. It is a well-conceived piece of legislation, and your ability to listen to concerns and to correct weaknesses and inadequacies is to your credit. I thank you for it.