Thursday, 16 August 2007
Tax Laws Amendment (2007 Measures No. 5) Bill 2007
That this bill be now read a second time.
This bill makes numerous improvements to Australia’s tax laws.
Schedule 1 modifies 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.
The measure applies where, broadly, a tax-exempt entity effectively controls the use of an asset and the taxpayer does not have a predominant economic interest in the asset. If the changes apply, capital allowance deductions will be denied and the arrangement will be treated as a loan that is taxed as a financial arrangement on a compounding accruals basis.
This reforms an integrity measure that restricts the transfer of tax benefits between a taxable entity and a tax-exempt entity. These changes streamline the existing harsh rules and will reduce the ongoing compliance costs of Australian businesses by providing greater flexibility.
Schedule 2 will ensure that the thin capitalisation rules operate as intended by amending 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 also amends the thin capitalisation rules. These amendments provide that certain authorised deposit-taking institutions (ADIs) known as specialist credit card institutions may be treated as if they were not ADIs. The changes reflect the different level of prudential regulation applied to these ADIs. The changes will reduce the compliance costs for these companies.
Schedule 4 extends the capital gains tax (CGT) marriage breakdown rollover to in specie transfers of personal superannuation interests from a small superannuation fund to another complying superannuation fund under certain conditions. This will 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 to 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 licence 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 a new licence or licences and other capital proceeds are also received.
Schedule 8 provides those with ownership interests in stapled entities with a CGT rollover to allow for the reorganisation of stapled groups, and in particular Australian listed property trusts. Australian listed property trusts will be able to interpose a head trust so that they can be treated as a single entity for the purpose of overseas acquisitions. These, and other amendments to the trust provisions, will improve the international competitiveness of Australian property trusts.
Schedule 9 amends the list of deductible gift recipients in the Income Tax Assessment Act 1997. Deductible 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 (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 by subsidiaries of multinational enterprises.
Schedule 12 establishes a new board called Innovation Australia to administer and oversight the Industry portfolio’s innovation and venture capital programs.
Full details of the measures in this bill are contained in the explanatory memorandum.
Debate (on motion by Mr Griffin) adjourned.