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Monday, 8 March 2004
Page: 20991


Senator ELLISON (Minister for Justice and Customs) (5:19 PM) —I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

TAX LAWS AMENDMENT (2004 MEASURES No. 1) BILL 2004

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 or 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 long-standing 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 CGT 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 fund-raising.

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 to the Senate.

—————

APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (No. 2) 2003-2004

Appropriation (Parliamentary Departments) Bill (No. 2) seeks additional funding of $341,000 for the Parliamentary Departments.

With the exception of funding for a small compensation payment made by the then Joint House Department, all of this money is related to Comcover Premium Supplementation for 2003-2004.

I commend the bill to the Senate.

—————

APPROPRIATION BILL (No. 3) 2003-2004

It is with great pleasure that I introduce Appropriation Bill (No. 3) 2003-2004.

There are three Additional Estimates Bills this year: Appropriation Bill (No. 3), Appropriation Bill (No. 4) and Appropriation (Parliamentary Departments) Bill (No. 2). I shall introduce the latter two Bills shortly.

The Additional Estimates Bills follow on from the Appropriation Bills that were introduced into the House on the occasion of the 2003-2004 Budget. They seek authority from Parliament for the additional appropriation of monies from the Consolidated Revenue Fund, in order to meet funding requirements that have arisen since the last Budget.

The total appropriation being sought through the Additional Estimates Bills this year is some $1,430.7 million, which is partially offset by expected savings in appropriations of around $473.4 million. These savings are described in the document accompanying the Bills, the “Statement of Savings Expected in Annual Appropriations”.

Taking savings into account, the net increase in appropriation being sought since the 2003-2004 Budget is approximately $957 million, or about 2% of total annual appropriations.

Two new clauses have been added to the three Additional Estimates Bills. The new clauses will provide a mechanism for the Finance Minister, on request from a portfolio Minister, to lapse amounts of departmental expense appropriations which are not required. Such amounts may be not required because of an accounting reclassification, efficiency gains resulting in reduced spending or changes in the structure of Government.

The first clause provides the lapsing mechanism in respect of the three bills. The second clause provides the same mechanism in respect of the annual appropriation acts agreed to since the 1999 Budget.

The total appropriation being sought in Bill 3 this year is around $945 million. This appropriation arises from routine changes in the estimates of programme expenditure, due to variations in the timing of payments and forecast increases in costs, reclassifications and the introduction of new Government measures since the last Budget, most of which have been described in the “Mid Year Economic and Fiscal Outlook” document published in December last year.

I will now briefly outline the main areas for which the Government is seeking additional appropriation in Appropriation Bill (No. 3).

$235.8 million to the Department of Defence, Department of Foreign Affairs and Trade, AusAID and the Australian Federal Police, in relation to peace-keeping commitments and aid work in the Solomon Islands;

$86.3 million towards Drought Assistance and interim support payments made as part of this package;

$75 million in indexation adjustments for the Department of Defence;

$75.1 million for rephasing from 2002-2003 into 2003-2004 of funds for the Department of Health and Ageing;

$65.5 million to the Australian Federal Police to cover the costs of the Papua New Guinea deployment;

$38.8 million for implementation of the MedicarePlus package;

$19.3 million to meet Australia's contribution payments to various international organizations;

$19 million across 15 of the 17 portfolios in order to implement the findings of the Budget Estimates and Framework Review;

$21.4 million in assistance for victims of the Bali terrorist attacks and their families and for meeting the cost of the investigations;

$14.3 million in relation to changes in the Hearing Services model;

and

$12.8 million towards the Government's response to the recommendations of the inquiry into regional telecommunications.

The remaining amount in Bill 3—around $269.5 million—relates to estimates variations and other measures.

I table the “Statement of Savings Expected in Annual Appropriations”, and I commend the bill to the Senate.

—————

APPROPRIATION BILL (No. 4) 2003-2004

Appropriation Bill (No. 4) provides additional funding for agencies for:

expenses in relation to grants to the States under section 96 of the Constitution and for payments to the Northern Territory and the Australian Capital Territory; and

non-operating purposes such as equity injections and loans.

The total additional appropriation being sought in Appropriation Bill (No. 4) 2003-2004 is around $485.4 million.

The principal factors contributing to the additional requirement since the 2003-2004 Budget are:

$294.6 million in additional payments to the States and Territories including:

- $187.7 million as part of the Drought Assistance package for exceptional circumstances;

- $36.7 million in funding to enable payments for Drug Diversion activities for the Tough on Drugs Initiative;

- $10.2 million in rephasings from previous years for the Commonwealth State and Territory Disability Agreement;

and

- $10.0 million in tax compensation payments to New South Wales and Victoria for an expected increase in revenue for Snowy Hydro Limited.

$190.8 million for non-operating expenses including:

- $47.0 million in equity injections for the Australian Federal Police in relation to the Papua New Guinea deployment, Solomons Islands operations and people trafficking;

- $43.0 million in equity injections for the Australian Customs Service which will be accessed if shortfalls occur in a number of initiatives, particularly the Cargo Management Re-engineering project;

and

- $32.4 million for payment to the Australian Rail Track Corporation Limited on finalisation of the company's lease of New South Wales main line track.

I commend the bill to the Senate.

Ordered that Tax Laws Amendment (2004 Measures No. 1) Bill 2004 be listed on the Notice Paper as a separate order of the day.

Ordered that further consideration of these bills be adjourned to the first day of the next period of sittings, in accordance with standing order 111.