Mr ROSS CAMERON (Parliamentary Secretary to the Treasurer) (9:54 AM) —I move:

This bill amends various taxation laws.

Firstly, this bill introduces amendments to complete the taxation arrangements for the new venture capital regime that was introduced in 2002. The amendments take effect from 1 July 2002, the date the venture capital regime commenced.

The venture capital regime was introduced to encourage new foreign investment into the Australian venture capital market and to further develop the venture capital industry. It provides a tax exemption to eligible nonresident investors on the gains made on eligible equity investments.

The amendments expand the range of venture capital investments that will qualify for the tax concession and remove minor impediments to ensure that the regime operates as intended. The tax concession will now be available for eligible investments that have been made in a holding company of a corporate group. Companies being spun-off from a corporate group or institution may also be eligible as they will be treated independently in determining eligibility for the concession.

This package completes the government's commitment to establish an internationally competitive framework for venture capital investments. It brings Australia into line with what is currently recognised as `best practice' within the international venture capital market.

Secondly, the Fringe Benefits Tax Assessment Act 1986 is amended to extend by one year the fringe benefits tax exemption transitional arrangements for certain contributions to worker entitlement funds.

Worker entitlement funds provide for employee entitlements such as leave payments or payments when an employee ceases employment. The fringe benefits tax exemption ensures that these contributions are not taxed twice, once as a fringe benefit when paid into the fund and again as income when paid out of the fund.

While the requirements for the fringe benefits tax exemption have been in place since 1 April 2003, transitional arrangements ensured that employers who contributed to existing worker entitlement funds according to existing industrial practice were also exempt from fringe benefits tax until 31 March 2004.

The purpose of the extension of the transitional arrangements is to provide an additional 12 months of security and certainty to employers while they put in place new arrangements to comply with the terms of the fringe benefits tax exemption.

Finally, following previous amendments to the foreign tax credit provisions, this bill corrects two instances where references to those provisions were no longer correct.

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 Swan) adjourned.