Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I present the supplementary explanatory memorandum to the bill. I ask leave of the House to move government amendments (1) to (4), as circulated, together.

Leave granted.

I move government amendments (1) to (4), as circulated, together:

(1)    Schedule 1, item 4, page 5 (after line 11), after paragraph 41-10(3)(a), insert:

           (aa)    disregard section 40-90 (reduction in cost where debt is forgiven); and

           (ab)    disregard subsection 40-365(5) (reduction in cost for replacement asset where involuntary disposal); and

(2)    Schedule 1, item 4, page 6 (lines 1 to 20), omit section 41-15, substitute:

41-15  Amount of deduction

        (1)    The amount that you can deduct is:

             (a)    if the ^*new investment threshold for the income year in relation to the asset is $1000 (small business entities)—50% of the total of the ^*recognised new investment amounts for the income year in relation to the asset; or

             (b)    if paragraph (a) does not apply but subsection (3), (4) or (5) applies—10% of that total; or

             (c)    otherwise—the sum of:

                   (i)    30% of the total of the recognised new investment amounts for the income year in relation to the asset that meet the condition in subsection (2); and

                  (ii)    10% of the total of the other recognised new investment amounts for the income year in relation to the asset.

        (2)    A ^*recognised new investment amount meets the condition in this subsection if:

             (a)    the ^*investment commitment time for the amount occurred before 1 July 2009; and

             (b)    the ^*first use time for the amount occurred before 1 July 2010.

        (3)    This subsection applies if the income year is the 2011-12 income year.

        (4)    This subsection applies if:

             (a)    you can deduct the amount because of paragraph 41-10(4)(a); and

             (b)    the ^*new investment threshold for the income year in relation to the asset exceeds the total of the ^*recognised new investment amounts for the income year in relation to the asset that meet the condition in subsection (2).

        (5)    This subsection applies if:

             (a)    you can deduct the amount because of paragraph 41-10(4)(b) or (c); and

             (b)    the ^*new investment threshold for the income year in relation to the asset exceeds the sum of:

                   (i)    the total of the ^*recognised new investment amounts for the income year in relation to the asset that meet the condition in subsection (2); and

                  (ii)    the total of the amounts treated under paragraph 41-10(4)(b) or (c) (as the case requires) as recognised new investment amounts for the income year in relation to the asset that meet the condition in subsection (2).

(3)    Schedule 1, item 4, page 8 (line 3), omit “commence”, substitute “start”.

(4)    Schedule 1, item 4, page 8 (after line 30), after subsection 41-25(3), insert:

     (3A)    For the purposes of paragraph (1)(a) and subsection (2), treat yourself as having started to construct an asset at a time if you first incur expenditure in respect of the construction of the asset at that time.

      (3B)    For the purposes of paragraph (1)(b), treat yourself as having started construction for an economic benefit at a time if you first incur expenditure in respect of the construction for the benefit at that time.

There are three amendments to the Tax Laws Amendment (Small Business and General Business Tax Break) Bill 2009. Amendment (2) provides a major boost for small businesses by increasing the bonus deduction to 50 per cent, as announced by the Treasurer last night. Small businesses will now be able to claim a bonus tax deduction of 50 per cent, up from 30 per cent previously, of the cost of eligible assets acquired between 13 December 2008 and 31 December 2009 and installed by 31 December 2010. I think most honourable members would acknowledge that small businesses are the backbone of the economy, employing millions of Australians, but many have faced some tough times during this global recession. The increased tax break provides small businesses with an even greater incentive to invest in new capital items such as computer hardware and business vehicles and to make capital improvements to existing machinery and equipment. The remaining amendments are technical in nature. In its current form, the bill precludes a taxpayer from claiming the 30 per cent deduction on a batch or set of eligible assets. A similar issue arises when an asset is jointly held by multiple taxpayers. This was not the intended outcome.

Amendment (2) also ensures that taxpayers can claim a deduction at the rate intended. Amendment (1) ensures that taxpayers are not precluded from a tax break merely because they have a debt forgiven or replace an asset that was subject to an involuntary disposal, even if the cost of the asset is reduced to zero for depreciation purposes. Amendments (3) and (4) clarify the meaning of the term ‘start to construct’ in the bill for taxpayers who construct their own assets.

This is a very important bill. It is an important measure not only to assist small business but also to stimulate investment in the economy. I commend the amendments to the House.

Question agreed to.

Bill, as amended, agreed to.