Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Hansard source

I thank those members who have taken part in the debate on the Tax Laws Amendment (2007 Measures No. 5) Bill 2007. I will begin by addressing the second reading amendment. In relation to the film production offsets, the shadow Assistant Treasurer raised the issue of access by independent producers. I respond by saying that it is only fair that the new tax offsets are available to all producers in the screen and media sector. To limit the offsets to independent producers would distort investment decisions in the production market. This would impact on the quality and quantity of drama produced for Australian audiences. Broadcasters have been able to access tax concessions under the division 10B and 10BA schemes, so there is no reason to now exclude them from the new arrangements. Making the offsets available to all businesses in the production sector will encourage diversity and a focus on audience appeal.

I note that significant incentives are already provided by the independent production sector, including direct funding by the Film Finance Corporation which cannot be accessed by broadcasters, and direct funding to the ABC and SBS of around $10 million per annum for the commissioning of programs from the independent sector. Further, independent production is encouraged by rewarding independent production under the Australian content standard for drama, which Australian commercial broadcasters are obliged to meet. Indeed, the government strongly supports our film industry, and these film incentives certainly demonstrate our commitment to the industry.

The shadow Assistant Treasurer also raised issues involving division 6C. The government acknowledges the need for broader reform of division 6C to ascertain what sensible reforms can be made to the division without compromising the integrity of the tax system. This process commenced earlier in the year, with Treasury indicating it would initiate discussions with the Property Council regarding possible reforms of division 6C, and a discussion with IFSA regarding a possible taxation regime for managed investment trusts.

Unlike the ALP, we do not just talk about conducting reviews, having further processes like think-tanks and inward-looking discussions; we actually do something, and we provide good outcomes for business. That is the main reason why Australian business at the moment are saying under no circumstances would they risk the Australian economy with an inexperienced Labor government dominated by union bosses.

The shadow Assistant Treasurer and the member for New England raised the issue of the CGT event with respect to old water licences. The government provided an additional $25 million to the Achieving Sustainable Groundwater Entitlements Program, which would substantially offset any tax on payments. The timing of the cash payments is unrelated to the timing of the CGT event, which is the ending of the licence. It goes without saying that to change the timing of the CGT event would create a difficult precedent—that is, a moving of tax events for some taxpayers—because later changes to the tax law would create an expectation by other taxpayers that we could do the same in other areas where CGT events take place.

This bill provides measures contained in a total of 12 schedules. Schedule 1 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 will also reduce the ongoing compliance costs of Australian businesses by providing greater flexibility.

Schedule 2 amends the thin capitalisation rules to ensure that they operate as intended. Amendments will be made to the definition of ‘excluded equity interest’ to remove those equity interests that remain on issue for a total period of 180 days or more.

Schedule 3 will allow groups that consolidate for tax purposes to apply for the thin capitalisation rules as if the group did not contain an authorised deposit-taking institution, or an ADI. Where the only ADIs in the group are specialist credit card institutions, the changes will reduce compliance costs for these groups.

Schedule 4 will provide a capital gains tax rollover on marriage breakdown to ensure that CGT need not be an impediment to separating spouses achieving a clean break from each other in terms of their superannuation.

Schedule 5 of this bill will exempt from income tax the Prime Minister’s Prize for Australian History and the Prime Minister’s Prize for Science to the extent that the prizes would otherwise be assessable income.

Schedule 6 amends the company loss recoupment rules to remove the $100 million total income cap on the same-business test. This will give all companies access to the same-business test to determine whether prior year losses can be deducted against future income.

Schedule 7 extends the existing statutory license CGT rollover. 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 new license or licences and other capital proceeds are also received.

Schedule 8 provides investors in a staple group of entities with the CGT rollover to allow the group to be headed by an interposed trust so that they can be treated as a single entity for the purpose of overseas acquisitions. The changes are also being made so that the interposed trust will not be taxed as a company after the restructure.

These amendments demonstrate the government’s commitment to making improvements to the tax law to enhance the international competitiveness of Australian managed funds and, in particular, Australian listed property trusts.

Schedule 9 amends the list of deductable gift recipients in the Income Tax Assessment Act of 1997. Deductable gift recipient status will assist these organisations in attracting public support for their worthy activities.

Schedule 10 introduces a package of incentives that will reform and strengthen the Australian film industry. This package will encourage private sector investment and improve Australia’s international competitiveness.

Schedule 11 extends the premium 175 per cent research and development, or R&D, tax concession to Australian R&D activities undertaken on behalf of multinational companies. This measure will encourage additional expenditure on R&D in Australia to allow subsidiaries of multinational enterprises to conduct those activities.

Finally, schedule 12 establishes a new board called Innovation Australia to administer and oversee the industry portfolios innovation in venture capital programs.

These changes to the tax laws demonstrate the government’s ongoing commitment to improving the quality of the tax laws and reducing the client’s costs for taxpayers. I again thank those who have participated in this debate and I commend the bill to the House.

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