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Thursday, 19 February 2004
Page: 25238


Mr ROSS CAMERON (Parliamentary Secretary to the Treasurer) (9:50 AM) —I move:

That this bill be now read a second time.

This bill makes amendments to the income tax law and other laws to give effect to several taxation measures.

Firstly, this bill amends the Income Tax Assessment Act 1936 to broaden the list of eligible medical expenses under the medical expenses tax offset to include payments made in maintaining a dog that is properly trained for guiding or assisting a person with a disability.

This will afford taxpayers with `hearing dogs' and `assistance service dogs' the same treatment under the medical expenses tax offset as is currently available to taxpayers who maintain a dog that is trained to guide or assist the blind.

Secondly, this bill provides an income tax deduction for transport expenses incurred in travel between workplaces.

The amendment maintains the deductibility of expenses incurred by taxpayers in travelling between two places of unrelated income-earning activity. This is consistent with a longstanding interpretation of the income tax law expressed in published taxation rulings and in TaxPack. For example, the amendment will maintain the deductibility of expenses incurred in travelling directly from one job to a second job.

The third measure amends the Income Tax Assessment Act 1997. It will improve the operation of the test that is used to determine when an entity controls a discretionary trust for the purpose of applying the small business capital gains tax concessions.

The new control test is generally based on actual distributions in the four income years before the income year for which access to the small business CGT concessions is sought. Distributions to exempt entities and deductible gift recipients will be ignored for the purposes of applying the new control test.

Schedule 4 amends the Energy Grants (Credits) Scheme (Consequential Amendments) Act 2003. This amendment will clarify the application of the transitional provisions in schedule 7 of that act, to ensure that an entity will be entitled to an energy grant for fuel purchased or imported in the three years before 1 July 2003, if that fuel was intended for a use that would have qualified for a credit under the Energy Grants (Credits) Scheme Act 2003 in the three years before 1 July 2003.

Schedule 5 amends the Income Tax Assessment Act 1997 to ensure that GST, which may later be recovered, does not count as part of the cost of an asset, when calculating capital gains tax.

Schedule 6 to this bill amends the A New Tax System (Australian Business Number) Act 1999. This will ensure that the law operates as originally intended and that the objectives of the Australian Business Number system are fully implemented. The amendments will clarify when protected Australian Business Number information can be disclosed to Commonwealth agency heads and state and territory department heads.

This measure will make it easier for businesses to conduct their dealings with Australian governments, as the amendments will prevent situations that require businesses to provide duplicate information to government.

Schedule 7 provides a tax deduction for contributions of cash or property to deductible gift recipients, where an associated minor benefit is received.

Currently, a personal tax deduction under the income tax law is only allowed for gifts to deductible gift recipients—that is, where the donor does not derive any material advantage or benefit in return for the gift.

This amendment provides that if a minor benefit is received by a person in return for making a contribution of cash or property, that benefit will not prevent their ability to receive a tax deduction, provided that the benefit does not exceed a specified limit and certain conditions are met.

This amendment is designed to encourage philanthropy by addressing some community concerns regarding fundraising.

Schedule 8 amends division 7A of the Income Tax Assessment Act 1936. It inserts certain integrity rules dealing with payments, loans and forgiven debts made by a trustee to a private company's shareholder or a shareholder's associate.

These amendments address issues concerning the effectiveness and fairness of certain anti-avoidance provisions contained in division 7A.

Broadly speaking, the amendments will more effectively ensure that a trustee cannot shelter trust income at the prevailing company tax rate and then distribute the underlying cash to a beneficiary of the trust through the use of a private company beneficiary. In addition, the amendments have been designed with targeted safeguards to ensure ordinary commercial transactions are not inadvertently caught by the rules.

Schedule 9 will correct an anomaly in section 46FA of the Income Tax Assessment Act 1936. This will ensure that the deduction for on-payments of certain unfranked non-portfolio dividends by a resident company to its wholly owned non-resident parent, continues to be available to certain resident companies.

The deduction was inadvertently made inoperative on introduction of the consolidations regime.

Schedule 10 will require charities, public benevolent institutions and health promotion charities to be endorsed by the Commissioner of Taxation in order to access all relevant taxation concessions. In addition, endorsed charities will now have their charitable status displayed on the Australian Business Register.

These changes are part of the government's response to the report of the Inquiry into the Definition of Charities and Related Organisations. The changes will allow greater scrutiny of the use of taxation concessions by charities, improve public confidence in the provision of taxation support to the charitable sector and provide charities with certainty of their entitlements.

Lastly, this bill updates the lists of specifically-listed deductible gift recipients in the Income Tax Assessment Act 1997. It adds to these lists new recipients announced since 10 December 2002. Deductible gift recipient status will assist these organisations to attract public support for their activities.

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

I commend this bill and present the explanatory memorandum.

Debate (on motion by Mr Edwards) adjourned.