TAXATION LAWS AMENDMENT BILL (NO. 5) 2000

The Bill amends the sales tax law to ensure that certain modifications relating to vehicles driven by, or used for transporting disabled persons, are not subject to sales tax. This measure will be of particular significance to the Paralympic Games in Sydney this year by helping to ensure that the transportation needs of the participants are met. This measure was previously announced and has application from 26 June 1998.

It also amends the employee share scheme provisions in Division 13A of the Income Tax Assessment Act 1936 as announced by the Treasurer on 2 September 1999. The proposed change to the law recognises that the market value of shares and unlisted rights to acquire shares, under an employee share scheme offered in association with a secondary or subsequent public offer of shares, is more equitably reflected in the public offer price of the share. This will provide certainty to both employers and employees as they will be in a better position to assess the tax consequences of their investment decision. The amendment will apply to shares and unlisted rights acquired from 2 September 1999.

The Bill will also amend the Income Tax Assessment Act 1936 by allowing extensions of time for the lodgement and correction of ultimate beneficiary statements. It provides trustees of closely held trusts with the power to recover the ultimate beneficiary non disclosure tax they paid (including any additional tax or penalty) from ultimate beneficiaries, trustee beneficiaries, or interposed trustees or partnerships whose provision of incorrect information, or refusal to provide information, led to the liability to ultimate beneficiary non disclosure tax, but only where the gross amount has been distributed in certain circumstances. Further, it clarifies that section 254 extends to ultimate beneficiary non disclosure tax obligations.

The amendments apply to present entitlements created after 4pm on 13 August 1998 Australian Eastern Standard Time.

Full details of the measures in this Bill are contained in the explanatory memorandum.

I commend the Bill and present the explanatory memorandum.

PRIMARY INDUSTRIES (EXCISE) LEVIES (GST CONSEQUENTIAL AMENDMENTS) BILL 2000

The purpose of this Bill is to prevent the unintentional increase of two primary industry levies arising from the introduction of the GST and to clarify the meaning of the terms `price' and `amount paid' in the Primary Industries (Excise) Levies Act 1999. The Bill excludes the GST from the base for calculating the Deer Velvet and Goat Fibre levies.

Section 9-75 of A New Tax System (Goods and Services Tax) Act 1999 defines the term `price' as an amount including GST. In conjunction, Section 177-12 of this Act attributes this definition to references to `price' in all other Commonwealth Acts, unless the specific legislation specifies that `price' and/or similar terms does not include GST.

The Deer Velvet and Goat Fibre levies are calculated on the basis of `price' or `amount paid'. If there were no legislative amendment, the amounts collected would rise when the GST is introduced because the base used for calculation of that levy will include GST. The following hypothetical situation demonstrates the rationale behind these amendments.

A deer producer sells $5,000 worth of deer velvet. Currently, the 5 percent levy on that sale would total $250. After 1 July, the producer sells the same amount of deer velvet for $5,500, assuming of course that there is no adjustment to the cost base and profit margin, and remits $500 GST to the Australian Taxation Office. If the Primary Industries (Excise) Levies Act 1999 were not changed, the levy on the sale would be $275, as it would be calculated at 5 percent of $5,500.

To avoid such a situation from occurring, the proposed amendments to Schedules 8 and 11 of the Primary Industries (Excise) Levies Act 1999 will expressly provide that the `price' of Deer Velvet and the `price' of or `amount paid' for Goat Fibre, for the purpose of calculating levies, would exclude the `net GST' in that amount. The amendments will override the definition of `price' and similar terms as outlined in Section 177-12 of A New Tax System (Goods and Services Tax) Act 1999. The same principle will be extended to 12 other levies through amendments to the appropriate regulations.

These amendments have a precedent in A New Tax System (Indirect Tax and Consequential Amendments) Act (No 2) 1999, which amended the Wool Tax Administration Act 1964. The Wool Tax is also calculated as a percentage of the sale price of wool and the amendments passed by Parliament have excluded the GST from the base for calculating this tax. This Bill will provide similar intent for the Deer Velvet and Goat Fibre levies.

This Bill is of a technical nature, designed to correct an unintended consequence of the definitions listed in Section 177-12 of A New Tax System (Goods and Services Tax) Act 1999 applying to other Commonwealth Acts. However, this Bill is important, as it will prevent an unnecessary cost increase for deer velvet and goat fibre producers.