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Thursday, 1 April 2004
Page: 27925


Mr ROSS CAMERON (Parliamentary Secretary to the Treasurer) (9:47 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, the amendments in schedule 1 improve the practical operation of the income tax law affecting life insurance companies and ensure that those provisions interact appropriately with other provisions in the income tax law.

Secondly, after listening to the concerns of business, the government is implementing, in schedule 2, further measures to give taxpayers greater flexibility and certainty as they move into the new consolidation regime.

As the new consolidation regime has changed the taxation landscape for many corporate groups, the government has continued its active consultation with business on its implementation.

To further assist business in managing the transition to consolidation, the government has provided its response to a number of issues raised by business and has provided further detail of how it intends to resolve these issues. A number of measures were announced by the Minister for Revenue and Assistant Treasurer on 4 December 2003.

The business community reacted positively to the minister's announcement, praising the government for providing greater flexibility to the consolidation regime and stated that the press release will provide certainty and greater guidance for groups going into consolidation.

The third measure includes amendments to ensure that limited partnerships with legal personality separate from their partners that are established under the venture capital regime are partnerships for income tax purposes, and able to access the venture capital tax concessions.

Schedule 4 allows for continuity of fringe benefits tax treatment for non-remote housing benefits where administration and payment of fringe benefits tax is devolved by state or territory governments to a departmental level, and there has been no material change in the provision of the benefit.

The fifth measure amends the Income Tax Assessment Act 1997 so that capital gains tax event K6 is not inadvertently triggered by the disposal of new interests in demerged entities. This will ensure that the pre-capital gains tax status of membership interests is fully preserved following a demerger.

Schedule 6 to this bill amends the Income Tax Assessment Act 1997 to ensure that all individuals who make United Medical Protection Limited support payments will be entitled to an income tax deduction for the amount of their contributions in that income year.

Several technical amendments to the A New Tax System (Goods and Services Tax) Act 1999 are made in schedule 7 to ensure that the GST insurance provisions apply as intended to transactions undertaken by operators of compulsory third party schemes.

Schedule 8 amends the fringe benefits tax law to provide public ambulance services with the same fringe benefits tax treatment as is provided to public hospitals. Public ambulance services will be able to access a fringe benefits tax exemption of up to $17,000 of grossed-up taxable value per employee. They will also be able to access the remote area housing fringe benefits tax exemption under the same criteria as apply to public hospitals. In addition, the income tax law will be amended to allow public ambulance services to be endorsed to receive tax deductible gifts.

The ninth measure includes amendments that give effect to the government's response to the Senate Select Committee on Superannuation report on the Taxation of transfers from overseas superannuation funds.

The key change will enable a taxpayer who is transferring their overseas superannuation to an Australian complying superannuation fund to elect to have part of the transfer treated as a taxable contribution in the Australian superannuation fund. By doing so the fund, rather than the individual taxpayer, will pay relevant tax arising on the transfer and tax will be paid at the concessional superannuation fund rate rather than at the individual's marginal rate.

This change will overcome the difficulties currently experienced by individuals who are faced with a tax liability but do not have recourse to funds to pay the liability due to the benefits being preserved in the Australian fund until retirement. This change, combined with the fact that the tax will now be payable at the concessional superannuation fund rate, should encourage affected individuals to transfer their overseas superannuation into an Australian fund.

A number of related amendments are also made to improve the operation and clarity of the provisions dealing with payments of overseas superannuation.

Schedule 10 of this bill will amend, as part of the further implementation of the simplified imputation system, division 207 of the Income Tax Assessment Act 1997 which deals with the tax effect of receiving a franked distribution. The amendments will complete the rules that deal with the receipt of a franked distribution indirectly through a partnership or trust. The amendments will also clarify aspects of the operation of division 207 and make consequential changes to division 207 and other parts of the simplified imputation system. In addition, amendments are made to the trans-Tasman imputation rules to implement a minor policy change and ensure consistency with division 207.

Schedule 11 to this bill makes a number of technical corrections to the Income Tax Assessment Act 1936.

Lastly, schedule 12 will amend the alienation of personal services income provisions to clarify when the Commissioner of Taxation may provide a personal services business determination to taxpayers. Where the commissioner grants a personal services business determination, the alienation provisions do not apply to the taxpayer. The amendments will ensure that the original policy intent of the alienation provisions is maintained.

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.