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Monday, 20 June 2011
Page: 3259

Senator McLUCAS (QueenslandParliamentary Secretary for Disabilities and Carers) (11:55): First of all, I thank those senators who have contributed to this debate on the Tax Laws Amendment (Measures No. 5) Bill 2010. Schedule 1 increases access to film tax offsets. It reduces the minimum qualifying expenditure threshold for the post-digital and visual effects, PDV, offset and it simplifies eligibility requirements for the location offset. This measure is expected to increase employment opportunities and to assist in building capacity and expertise in the local film industry, which will in turn provide benefits for domestic productions.

The change to the location offset in particular will also reduce compliance costs for affected taxpayers. The government is assisting the film industry to attract offshore productions to Australia and expand opportunities for Australian PDV providers to bid for international work. This schedule gives effect to the government's 2010-11 budget announcement. The government, in the 2011-12 budget, has made further commitments to providing support to the Australian film industry.

Schedule 2 adjusts the benchmark interest rate used in the taxation of capital protected borrowing provisions to the Reserve Bank of Australia's indicator lending rate for standard variable housing loans plus 100 basis points for capital protected borrowings entered into, amended or extended after 7.30 pm AEST on 13 May 2008. These changes to the benchmark interest rate were first announced on 13 May 2008 and revised on 11 May 2010. The new benchmark interest rate provides a more appropriate basis for apportioning the expense in capital protected borrowings between interest on a borrowing that does not embed the cost of capital protection on one hand and the cost of capital protection on the other. The cost of capital protection will not be treated as interest for tax deductibility purposes. The new benchmark rate takes into account industry concerns over the credit risk borne by lenders for the cost of capital protection that is paid on a deferred basis.

Schedule 2 also provides for transitional arrangements for capital protected borrowings entered into at or before 7.30 pm AEST 13 May 2008. The transitional arrange­ments allow capital protected borrow­ings entered into on or before 13 May 2008 to apply the existing benchmark interest rate until 30 June 2013 or the life of the product, whichever is earlier. This schedule was referred to the Senate Econ­omics Legislation Committee for inquiry and report on the rationale and consequences of changing the benchmark interest rate. The committee recommended that the benchmark interest rate be amended to reflect a range between the variable rate for housing loans and the RBA's indicator lending rate for margin loans. The new benchmark interest rate of the RBA's indicator lending rate for standard variable housing loans plus 100 basis points is consistent with the range recommended by the committee.

These amendments are expected to save $170 million over the forward estimates period. These changes are another demonstration of the government's com­mitment to ensure that the tax system is as fair and as efficient as possible.

Schedule 3 extends the main residence capital gains tax exemption to cover a CTG event—that is, a compulsory acquisition or other involuntary realisation of a part of a main residence. The extended exemption will apply where part of a main residence—the part being some or all of the dwelling's adjacent land or structure—is compulsorily acquired without the dwelling itself also being compulsorily acquired.

Sitting suspended at 12:00

At 14:38, senators assembled in the House of Representatives chamber for a joint sitting—