George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Hansard source

I thank honourable senators for their contributions to the debate on the Tax Laws Amendment (2007 Measures No. 4) Bill 2007, the associated imposition bills and the Tax Laws Amendment (2007 Measures No. 5) Bill 2007.

Turning first to TLAB4, schedule 1 will abolish foreign loss and foreign tax credit quarantining and streamline the remaining foreign tax credit rules. It also contains transitional rules for the treatment of existing foreign losses and credits. By reducing compliance costs and complexity in the law, these changes will assist businesses operating or seeking to grow internationally. Schedule 2 provides a capital gains tax rollover for membership interests in companies limited by guarantee that are also medical defence organisations. Schedule 3 will allow superannuation funds to continue to invest in instalment warrants, consistent with longstanding practice. Such warrants must be of a limited recourse nature and can be held over any asset a fund is permitted to invest in directly.

Schedule 4 introduces simplified trustee beneficiary reporting rules. These rules will target arrangements where complex chains of trusts are used to obscure the ultimate beneficiary of the assessable trust income. These changes demonstrate the government’s ongoing commitment to reducing red tape and regulatory burdens. Schedule 5 will assist in the smooth transition to the simplified superannuation regime known as Better Super and clarify the policy intent. Schedule 6 amends the list of deductible gift recipients in the Income Tax Assessment Act 1997. Deductible gift recipient status will assist the listed organisations to attract public support for their worthy activities. Schedule 7 implements various minor technical amendments and makes general improvements to the law that will improve the quality of the tax laws and reduce complexity. Finally, schedule 8 amends the trust loss rules which apply to family trusts. The amendments allow family trust elections to be varied or revoked in a broader range of circumstances and also expand the definition of ‘family’.

I now turn to the Tax Laws Amendment (2007 Measures No. 5) Bill 2007. Schedule 1 to this bill significantly improves the tax treatment of leasing and similar arrangements between taxable entities and tax exempt entities, including foreign residents, for the financing and provision of infrastructure and other assets. These changes streamline the existing harsh rules and reduce the compliance costs of Australian businesses. Schedule 2 amends the thin capitalisation rules to ensure that they operate as intended by changing the definition of excluded equity interest. Schedule 3 will allow groups that consolidate for tax purposes to apply the thin capitalisation rules as if the group did not contain an authorised deposit-taking institution where the only authorised deposit-taking institutions in the group are specialist credit card institutions. Schedule 4 will provide a capital gains tax rollover upon marriage breakdown to ensure that capital gains tax need not be an impediment to separating spouses wanting to achieve a clean break from each other in terms of superannuation.

Schedule 5 to the bill exempts from income tax the Prime Minister’s prizes for Australian history and science to the extent that the prizes would otherwise be assessable income. Schedule 6 removes the $100 million total income cap on the same business test in the company loss recoupment rules. When determining of prior year losses can be deducted against future income, all companies will have access to the same test. Schedule 7 extends capital gains tax rollover relief for statutory licences. The rollover will apply where a statutory licence ends and is replaced by one or more new licences that authorise substantially similar activity to the activity authorised by the original licence or licences. The measure also provides a partial rollover where a statutory licence ends and is replaced by a new licence or licences and other capital proceeds are also received.

Schedule 8 allows a stapled group of entities to restructure with an interposed head trust without triggering certain tax consequences. Under the measure, a restructure that involves interposing a head trust over a public unit trust that is stapled to a company will not result in the interposed head trust being taxed as a company under division 6C of the Income Tax Assessment Act 1936. These amendments will particularly enhance the international competitiveness of Australian listed property trusts. Schedule 9 updates the list of deductible gift recipients and extends the period for which deductions are allowed for gifts to a fund that has time limited status.

Schedule 10 introduces a package of incentives that will reform and strengthen the Australian film industry, which was announced in the 2007-08 budget. I will return to schedule 10 and make some additional remarks in a moment. Schedule 11 extends the premium 175 per cent research and development—R&D—tax concession to Australian research and development activities undertaken on behalf of multinational companies. Finally, schedule 12 establishes a new board called Innovation Australia to administer and oversee the industry portfolios innovation and venture capital programs.

I would like to say a few additional words about schedule 10 of TLAB5, which implements the film package. As Senator Ronaldson pointed out in his contribution, that has been rapturously received by the film industry.