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Tuesday, 1 March 2011
Page: 1924


Mr ANTHONY SMITH (9:19 PM) —This Tax Laws Amendment (2010 Measures No. 5) Bill 2010 has seven schedules. I will run through each of those schedules briefly at the outset and outline the opposition’s position on this bill. As with most tax laws amendment bills, members would be aware that many of the schedules are not contentious. With this bill there is one schedule that the coalition wants to see further information on and reserves its position on until the outcome of an already underway Senate inquiry. I will run through each of those schedules.

As I said, there are seven schedules. The first schedule deals with film tax offsets. The second schedule deals with amendments to the capital protected borrowing provisions. The third schedule relates to capital gains tax in situations where there is a compulsory acquisition taking place. The fourth schedule deals with deductions in benefits for terminal medical conditions related to superannuation. The fifth schedule deals with non-profit subentities. The sixth schedule deals with technical details related to running balance accounts. The seventh schedule deals with education expenses, tax offsets specifically related to school uniforms.

As I said at the outset, the coalition do not regard as contentious most of the schedules in the bill and we will not be opposing the bill in this House. However, with regard to schedule 2, relating to capital protected borrowings, we do note that there is some history to this and it does warrant further consideration, which is occurring, as I said, through a Senate committee inquiry that is underway. I should also point out that, as the shadow Treasurer has previously indicated—I think in the debate on the last tax laws amendment bill—we on this side of the House will be moving an amendment to this legislation to add a schedule, schedule 8, to provide for the public to receive a tax receipt for the tax that they pay. That has been canvassed and debated in this House and, unfortunately, rejected previously by the government. But we live in hope that, under the new paradigm of letting the sunlight in, the government will see the folly of rejecting a sensible amendment to provide taxpayers with tangible information about how their taxes are spent.

I will deal with each aspect of the bill—and I am sensing, looking at the benches opposite, that it would probably suit the parliamentary secretary on duty, the member for Ballarat, if I dealt with these matters in some detail, for up to and including about 5½ minutes! Schedule 1 deals with two changes to the eligibility criteria for accessing the film tax offsets, reducing the qualifying expenditure threshold for the post-digital visual effects offset from $5 million to $500,000, and removing local production expenditure requirements for films between $15 million and $50 million. I have already mentioned schedule 2, and I will leave that until the end.

Schedule 3 deals with extending the main-residence capital gains tax exemption to deal with events—as was noted in the explanatory memorandum and the minister’s speech—where there is a compulsory acquisition of part of the adjacent land or structure of a main residence. This is where there is an involuntary event, to ensure that that existing exemption applies.

Schedule 4, as I outlined, deals with changes to the rules surrounding deductions in relation to benefits for terminal medical conditions. In doing so, it allows for costs associated with providing terminal medical condition benefits to become tax deductible.

Schedule 5 allows non-profit subentities to access the goods and services tax concessions available to the parent entity, including the higher registration turnover threshold available to non-profit bodies. As I understand it, this essentially legislates what the Commissioner of Taxation’s interpretation has effectively been and gives some certainty to it. I cannot ever allow any amendment relating to the goods and services tax to pass by—and I do this in every debate—without at least mentioning the fact that those opposite, who so vigorously opposed the goods and services tax, with every tax laws amendment bill inevitably find themselves protecting its operation and its base. I like to point that out every time we debate a schedule relating to the GST.

Schedule 6 of the bill provides that it will not be mandatory for the tax commissioner to apply a payment, credit or running balance account surplus against a tax debt that is a business activity statement amount unless that amount is due and payable. The history behind this recommendation and indeed the earlier one, I am told, is that they were made by the Board of Taxation in its review of the legal framework relating to the administration and operation of the A New Tax System (Goods and Services Tax) Act.

I return to schedule 2, which I indicated at the start is the one schedule on which the coalition do want to receive further information. This schedule makes amendments to the capital protected borrowings provisions. The coalition, and shadow Assistant Treasurer Senator Cormann in particular, are concerned about these provisions because the changes to the benchmark interest rate for those capital protected borrowings have a history in terms of government announcements and industry reaction, and all of the indications are that there should be further work in this area. We know that if the government can effect a tax increase in any way, as the shadow Treasurer knows, they will surely do so—


Mr Hockey —Like rats up a drainpipe!


Mr ANTHONY SMITH —sometimes brazenly, as we have seen in the last week, and many times secretly. Whichever way, they are always thinking of a tax increase. So the government made its original announcement. Industry was not consulted about the change. The government did make an amendment or a change to that. Industry still believes that the outcome itself will severely disadvantage that sector. We are told the government will have gained revenue of $170 million over the forward estimates, but that includes, I am advised, a cost of $28 million for a change to its original announcement way back in 2008, on budget night. At this time, the Senate Economics Legislation Committee is examining schedule 2 of the bill, and the coalition will not take a final decision until that Senate committee has reported. But, as I said, we will not be opposing the bill in this House.

Debate interrupted.