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Monday, 15 November 2010
Page: 2187


Mr ANTHONY SMITH (12:46 PM) —It is a pleasure to speak on the Tax Laws Amendment (2010 Measures No. 4) Bill 2010. As with all tax law amendment bills, this bill has a number of schedules, in fact seven schedules in all, that make a variety of changes to the existing law, or clarify the law to correct errors or implement policy decisions. I will briefly run through each of those schedules.

The first schedule relates to the goods and services tax, specifically, to amend the A New Tax System (Goods and Services Tax) Act 1999 to ensure third-party payment adjustment provisions operate appropriately where there are third-party payments relating to a supply by a taxpayer that is not taxable or a supply or payment that is goods and services that is GST free, not connected with Australia or subject to a refund under the tourist refund scheme. That was outlined, as were all the other changes within this bill, within the explanatory memorandum. I note that the minister just seconds before the resumption of the debate tabled a correction to the explanatory memorandum. We will have a look at that, not having been provided with it prior to the commencement of the debate. We assume that it is minor in nature.

Whenever there is a tax law amendment bill that deals with GST issues it would be remiss of me not to remind those opposite, and indeed in this case the deputy chair, that it is good that the government is ensuring the integrity of the GST. It is a tax that they opposed vigorously back in 1999 and 2000. In fact it is now a little over 11 years and four months since former Prime Minister Mr Rudd declared in this House on 30 June 1999 that that day, because of the GST:

… will be recorded as a day of fundamental injustice—an injustice which is real, an injustice which is not simply conjured up by the fleeting rhetoric of politicians.

With each tax law amendment bill we see the integrity of the GST maintained, and it is good that we do see that. But it would be remiss of me not to point out the hypocrisy of those opposite.

Capital gains tax treatment of water entitlements and termination fees is dealt with in schedule 2 of the bill, as the explanatory memorandum points out. This schedule amends the income tax act of 1997 to provide for CGT rollover for taxpayers who replace an entitlement to water with one or more different entitlements, and some transitional measures associated with that.

The third schedule deals with two issues within three parts. Those two issues are: amendments to the taxation of financial arrangements provisions—part 1 of schedule 3 amends division 230 of the Income Tax Assessment Act and the consequential transitional provisions inserted by the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 to make minor policy refinements and technical amendments and corrections to the provisions. The second part of schedule 3 extends transitional arrangements relating to the application of the debt equity rules made by the New Business Tax System (Debt and Equity) Act 2001. The other area dealt with in schedule 3 is amendments to the foreign currency gains and losses provisions. As the explanatory memorandum outlines, part 3 of schedule 3 amends the foreign currency gains and losses provisions of the Income Tax Assessment Act 1997 to extend the scope of a number of compliance cost savings measures and to make technical amendments to ensure that the provisions operate as intended.

Schedule 4 deals with the issue of script for script alignment and, again, amends the Income Tax Assessment Act 1997 to make it easier for takeovers and mergers regulated by the Corporations Act 2001 to qualify for the CGT script for script rollover. In the explanatory memorandum we are told with respect to those first four schedules that the financial cost is nil, unquantifiable or expected to be very minimal indeed.

Schedule 5 deals with an increase in the medical expenses tax offset claim threshold, as announced in the budget earlier this year. Essentially this increases the threshold above which a taxpayer may claim the medical expenses tax offset and begins a process of indexation. The financial impact of this is a gain to the budget in 2011-12 of $95 million, rising to $115 million in 2012-13 and $140 million thereafter.

Schedule 6 of the bill amends the Income Tax Assessment Act to update the list of deductible gift recipients. As I indicated at the start, this sort of schedule is quite typical within this kind of legislation. It updates the deductible gift recipient list to include One Laptop per Child Australia Ltd. Other organisations on the list will include the Xanana Vocational Education Trust and the Mary MacKillop Canonisation Gift Fund.

Schedule 7 extends gift deductibility to volunteer fire brigades. It adds three new deductible gift recipient categories to the Income Tax Assessment Act. This will widen accessibility of deductible donations to all entities providing volunteer based emergency services, including volunteer fire brigades, as the explanatory memorandum points out. It also extends DGR status to state and territory government bodies that coordinate volunteer fire brigades and SESs. With respect to schedules 6 and 7, there is a small financial impact going forward as a result of adding those organisations to the deductible gift recipient list.

The opposition is not opposing the Tax Laws Amendment (2010 Measures No. 4) Bill 2010, which has a number of important measures within it and corrects important areas of law. It is something that needs to be passed through this House. I give notice, though, that later in the debate the shadow Treasurer will be moving an amendment not to any of the seven schedules which I have outlined that the opposition is not opposing but to add a schedule 8 to the bill to deal with some important transparency measures on issues of tax and government expenditure. He will speak next in the debate from our side of the chamber and he will outline the detail of the amendment and the coalition’s approach.