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Wednesday, 3 December 2008
Page: 12308

Mr BOWEN (Minister for Competition Policy and Consumer Affairs, and Assistant Treasurer) (10:25 AM) —I move:

That this bill be now read a second time.

This bill amends various taxation laws to implement a range of improvements to Australia’s tax laws.

Schedule 1 modifies the capital gains tax provisions in the Income Tax Assessment Act 1997 for corporate restructures. Companies will be prevented from obtaining a market value cost base for shares and certain other interests acquired in another entity following a scrip for scrip CGT rollover under an arrangement that is taken to be a restructure.

An arrangement will be taken to be a restructure if, broadly, the market value of the shares and certain other interests issued by the acquiring entity under the arrangement in exchange for similar interests in the original entity is more than 80 per cent of the market value of all the shares and other interests issued by the acquiring entity.

If an arrangement is taken to be a restructure, then the cost base of the shares and other interests that the acquiring entity acquires in the original entity will reflect the tax costs of the underlying net assets of the original entity, rather than its market value.

This is an important integrity measure which the former government announced its intention to deal with in October 2007. However, the former government’s proposal was poorly targeted and effectively stopped scrip for scrip arrangements, causing disruptions in the market.

The government’s measure has been refined through extensive consultation and will effectively target the mischief.

The amendments, which apply to arrangements entered into after 7.30 pm Australian Eastern Standard Time on 13 May 2008, will prevent companies from gaining significant unintended tax benefits by restructuring.

Schedule 2 amends the Taxation Administration Act 1953 to address a number of issues with the assistance in collection provisions. Specifically, these provisions enable the Commissioner of Taxation to take action to collect or conserve tax debts owed in another country where the debtor is resident in Australia or has assets in Australia.

These amendments provide for a new mechanism by which a debtor’s liability is reduced in certain circumstances, expands the type of payments that the commissioner can make to a foreign country with which Australia has an international agreement and clarifies the role of the Foreign Claims Register, which records all the foreign tax debts that the commissioner collects on behalf of foreign countries. Together, these amendments will enable the assistance in collection provisions to more effectively be administered.

Schedule 3 amends the Superannuation Guarantee (Administration) Act 1992 with regard to the late payment offset. The offset allows an employer who makes a late superannuation guarantee contribution for an employee to use that contribution to offset against part of their superannuation guarantee charge liability. There is currently no specified time limit in which the employer is required to make the contribution.

These amendments specify that an employer will be able to use the offset if they make the contribution before they are assessed with the superannuation guarantee charge liability. This will encourage employers to make their contributions in a more timely manner whilst still having the benefit of using the offset to reduce their superannuation guarantee charge liability.

Schedule 3 also amends the calculation of the general interest charge on an unpaid superannuation guarantee liability where the offset is used. The calculation of the general interest charge will be amended so that it accrues on the remaining amount of the unpaid liability after the offset has been applied. This reduces the amount of the general interest charge and acknowledges the fact that the employer has made a contribution for their employee.

These amendments commence from the date this bill receives royal assent.

Finally, the bill implements various minor amendments to the law and also some general improvements of a minor nature. These amendments reflect the government’s commitment to the care and maintenance of the tax system.

Full details of the measures contained in the bill are in the explanatory memorandum.

I commend the bill to the House

Debate (on motion by Dr Stone) adjourned.