David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I move:

That this bill may proceed without formalities and be now read a first time.

Question agreed to.

Bill read a first time.

I table a revised explanatory memorandum and move:

That this bill be now read a second time.

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

Leave granted.

The speech read as follows—

This Bill amends various taxation laws to implement a range of improvements to Australia's tax laws.

Schedule 1 amends the income tax law to provide the Commissioner of Taxation with discretion to disregard certain events that would otherwise trigger the assessment of certain income for a primary production trust in the year of the event.

Currently, the income tax law allows primary producers to defer or spread profits made on certain forced disposals or death of livestock arising from natural disasters.

However, the concession immediately ends upon the happening of a disentitling event, for example, when a beneficiary leaves Australia permanently. This can produce some inappropriate outcomes. For this reason the Government is broadly restoring the discretion which existed prior to the Tax Laws Improvement Project in 1997.

This Schedule also removes the death of a beneficiary as a disentitling event.

These amendments apply retrospectively from the 2005-06 income year and ensure a favourable position for affected taxpayers.

Schedule 2 relates to the Petroleum Resource Rent Tax (PRRT). Since its introduction by the Hawke Government in 1986, the PRRT has played an important role in ensuring that a share of the economic rent generated from offshore petroleum projects is retained by the community. From 1 July 2012, as part of the Government's resource tax reforms, the PRRT will be extended to cover all Australian oil and gas projects, including for the first time those located onshore, as well as the North West Shelf project.

In this context, it is vital that current and prospective PRRT taxpayers can be certain as to how the PRRT applies to their specific projects.

Schedule 2 provides this certainty by amending the Petroleum Resource Rent Tax Assessment Act 1987 to reinforce the long-established interpretation, recently affirmed by the Federal Court, of how the 'taxing point' is determined for the purposes of the PRRT.

The taxing point is central to the determination of PRRT liabilities, in that it is the point at which assessable revenue for a petroleum project is determined, and up to which project expenditures are deductible.

Specifically, this Bill clarifies the definition of a 'marketable petroleum commodity' in the PRRT law. Under the PRRT law, the taxing point occurs where marketable petroleum commodities produced by a petroleum operation become 'excluded'—normally by being sold or by being moved from the place of production.

The new definition explicitly requires that the intended final use of a substance be taken into account in determining where in the production chain a marketable petroleum commodity is produced. This requirement has always existed, albeit implicitly, and is clear given the structure and operation of the PRRT law as a whole. The PRRT has operated on this basis for over twenty years.

By making this existing requirement explicit, the amendments will put the matter beyond doubt, removing any lingering uncertainty around a central element of the PRRT.

This measure was first announced in the 2011-12 Budget. Consistent with that announcement, the amendments are effective from 1 July 1990.

Because the measure serves only to clarify and affirm the current application of the PRRT, it does not impose any additional tax burden. Accordingly, these amendments have no revenue impact.

Schedule 3 contains minor consequential amendments to the taxation arrangements that bring the gaseous fuels (liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG) into the fuel tax regime. The changes ensure that legislation applies as intended and does not impose excessive compliance costs on the gaseous fuels industry.

The amendments in this Schedule confirm that excise duty does not apply when CNG fuel is manufactured in home refuelling units that do not have commercial scale capacity.

The amendments also confirm that entitlements to fuel tax credits are available to unlicensed distributors of LPG for non-transport applications; and that the content of notices to accompany the supply of LPG for non-transport use, which will be developed in consultation with the gaseous fuels industry, will be set out entirely in regulations.

The measures contained in this Schedule apply from 1 December 2011.

The Gillard Government will also introduce new legislative arrangements, that will allow up to six business days after the end of the weekly duty accounting period before duty payments must be made by entities with gaseous fuel tax obligations.

The changes will apply to duty obligations for LPG, LNG and CNG. They will not impact on payment of duty for other types of fuel.

The revised arrangements are in response to the concerns of marketers who, in many cases, are unable to identify whether deliveries of gaseous fuels are for transport use or for non-transport use until deliveries are made and invoices are processed. This may be some days after the fuel has left excise or customs-licensed premises.

The revised arrangements provide flexibility for existing parties in the fuel tax system to maintain their existing payment arrangements. This reflects the Gillard Government's willingness to respond to industry concerns and develop workable and practical solutions.

In the short term, in the absence of legislation, I am advised by the Commissioner of Taxation that he will administer the periodic settlement permissions under the existing excise law to allow duty to be paid for gaseous fuels up to six business days after the end of the weekly duty accounting period from 1 December 2011.

These arrangements by the Commissioner will continue once legislation is enacted to give effect to the Government's decision on the six business day payment arrangement for gaseous fuels.

Full details of the measures in this Bill are contained in the explanatory memorandum.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.