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Monday, 7 March 2005
Page: 132


Senator COONAN (Minister for Communications, Information Technology and the Arts) (9:18 PM) —I thank all senators for their contribution and note that Senator Stott Despoja is now back from maternity leave. I am only surprised that Conrad is not here to make a contribution this evening.


Senator Stott Despoja —He’s asleep.


Senator COONAN —You can enjoy it while he is asleep, Senator Stott Despoja. In any event, welcome back.


Senator Stott Despoja —Thank you.


Senator COONAN —I am now summing up on the Tax Laws Amendment (2004 Measures No. 6) Bill 2004. The bill continues the government’s steady program of modification and improvements to the tax laws and gives effect to a number of budget announcements from last year. The first measures in the bill deal with consolidations. As the new consultation regime has changed the tax landscape for many corporate groups, the government has continued its active consultation with business on its implementation. The bill further demonstrates the government’s commitment to this process and results in greater flexibility and certainty for taxpayers.

For instance, the bill clarifies the position of entities under external administration. The membership rules are being modified to ensure that an entity in liquidation or under administration can still be a member of a group. The bill also gives taxpayers joining or leaving groups more options with regard to certain elections and clarifies the consolidation cost-setting rules on finance leases, certain types of mining expenditure and low-value and software development pools.

The bill ensures that copyright-collecting societies are not taxed on income collected on behalf of members. Copyright-collecting societies administer copyrights for copyright owners, including authors and composers, and may receive payment in relation to the copyrights. Where this happens the societies hold the payments in trust for the copyright owners. The bill will ensure that copyright-collecting societies that meet certain criteria will be exempt from income tax on copyright related income and certain other income. Instead, the income will be taxed in the hands of the copyright owner. The third schedule to the bill implements a further tranche of the simplified imputation system. It continues the roll-out of the simplified imputation system and contains a number of technical and consequential amendments to this end.

Next, the government is updating the lists of organisations which qualify as deductible gift recipients. Deductible gift recipient status assists organisations to attract public support for their activities. In particular, the government is ensuring that special schools, which, I think we all agree, do such an important job, can continue to qualify as deductible gift recipients when endorsed by the Commissioner of Taxation. Importantly, given the events earlier this year in South Australia, the Country Fire Authority in Victoria and equivalent coordinating bodies in other states and territories are being assisted by being given deductible gift recipient status.

The bill provides some relief for businesses with at-call loans by extending an existing transitional provision in the debt equity rules. Transitional arrangements which treat at-call loans as debt for income tax purposes will be extended from 30 June 2004 to 30 June 2005. This will give businesses more time to assess existing loans and, if need be, adjust their arrangements. In the meantime the government has announced that it will develop a carve-out from the debt equity rules to reduce unnecessary compliance costs for many small businesses using at-call loans.

The next measure will assist irrigation providers and rural land irrigators to renew water supply infrastructure and encourage rural land irrigators to carry out land care operations by giving them an outright deduction for the cost of capital expenditure on land care. I know that this is a particularly welcome measure. Another feature of this measure is that it clarifies the meaning of the term ‘water facility’ and makes it plain that it might include, depending on circumstances, a bridge over an irrigation channel or a fence to keep livestock out of an irrigation channel.

The seventh measure in the bill removes an anomaly in the fringe benefits tax law by making sure that employers do not lose the exemption for relocation costs just because the employee buys a new house before selling an old house. This is part of a program of measures to ensure that the exemption remains relevant to small business and other employers with regional work forces such as police and ambulance services, a particularly important measure given some of the great difficulties of attracting police and other services to rural and regional areas. The eighth measure will allow taxpayers to more easily claim a capital loss on worthless shares. The capital gains tax rules will be simplified to allow any insolvency practitioner and not just the liquidator to declare shares or other equity interests in a company to be worthless for capital gains tax purposes. The measure will certainly be welcomed by shareholders because it will assist them to close the book on worthless investments earlier and with less cost.

Turning to the GST law: an anomaly was identified in relation to residential property whereby certain services are GST free if the owner is overseas but subject to GST if the owner is in Australia. This anomaly will now be corrected.

As to the baby bonus, that of course is a matter of equity, and I acknowledge Senator Stott Despoja’s interest and role in this particular measure. It will allow adoptive parents to claim the baby bonus retrospectively for the period between taking care of the child and being granted legal responsibility so that they are effectively in the same position as non-adoptive parents. The changes also ensure that parents who have already claimed the bonus for the period between taking care of the child and being granted legal responsibility will not have to repay if their claim was otherwise correct.

This may be a convenient place to deal with Senator Stott Despoja’s second reading amendment relating to the maternity payment. The maternity payment recognises the legal relationship between a mother and a newborn baby and the extra costs associated with the birth or adoption of a baby. It is, I think on any view, a generous scheme which represents a streamlining of the previous maternity allowance and baby bonus. One of the changes the scheme makes is to move the payment of the benefit from the tax system to the social security system. This means that the particular issue that has been identified might therefore be better considered in another context. I no longer occupy my former role in terms of being able to respond directly to Senator Stott Despoja’s letter, but I will certainly ensure that the concerns she has enunciated are brought to the attention of Senator Patterson. For that reason, the government will not be supporting the second reading amendment.

The last measure in the bill relates to life insurance transfers and it alleviates unintended income tax consequences that can occur when a life insurer transfers some or all of its life insurance business to another life company under either part 9 of the Life Insurance Act 1995 or the Financial Sector Reform (Transfer of Business) Act 1999. Given the debate and former speeches in relation to this matter, apart from these summaries of the measures, I do not propose to delay the Senate any longer. Taken as a whole, it is a fair comment to say that the bill represents some substantial improvements to the tax law, and I commend the bill to the Senate.

Question negatived.

Original question agreed to.

Bill read a second time.