Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Hansard source

The opposition will support the Tax Laws Amendment (2008 Measures No. 2) Bill 2008 and I want to speak briefly to it. It is almost identical to the coalition’s bill last year that lapsed because of the election, and it has bipartisan support. It has also been amended, as I understand it, in the lower house by also including non-controversial schedules 2 to 6 from Tax Laws Amendment (2008 Measures No. 1) Bill. I wish to speak briefly to the bill.

As I said, it contains schedules relating to tax law reform. The first schedule relates to amounts misappropriated by an employee or agent. This measure fills a gap in the existing tax laws. It is a measure that the coalition announced in May 2007 and addresses the inequity of a taxpayer effectively being taxed on an amount that the taxpayer has not received. Typically, the situation could happen where the taxpayer sells an asset that has been depreciated for tax purposes. Under the measure, the taxpayer still includes the excess in their assessable income but, in recognition of the fact that the proceeds have been misappropriated by the employee or agent, a deduction is allowed for the amount of the sale proceeds. Where the asset is not eligible for depreciation or similar relief but is taxed under the capital gains tax—the CGT rules—a sale would ordinarily result in the proceeds being taken into account in calculating the amount of the gain. Under the measure, the amount of the proceeds will be reduced by the amount that was misappropriated by the taxpayer’s employee or agent. Specific rules are being introduced to cater for the situation where the taxpayer has calculated their tax position as a result of a misappropriation but later recovers all or some of the amount misappropriated.

The second schedule that is supported relates to extending the superannuation guarantee late payment offset. When announcing the change to the superannuation guarantee late payment offset, the Minister for Superannuation and Corporate Governance appears to have made a mistake. He appears not to have been aware of a press release that had been issued by the former Assistant Treasurer, the member for Dickson, that initially announced the decision to change the offset. The measure addresses the situation where an employer is late in paying their compulsory super and thus has a contribution shortfall. The employer who is late in paying a superannuation contribution for an employee must also pay the same amount to the ATO as part of the superannuation guarantee charge. Under this measure, the employer who pays a late superannuation contribution will be able to offset that payment against the liability for the superannuation guarantee charge. Thus the employer pays the amount of the super contribution only once. The employer will still be liable for interest and an administration charge for not making payment of the employee’s super on time.

The third supported schedule in Tax Laws Amendment (2008 Measures No. 2) Bill 2008 is the capital gains tax market value substitution rule for interests in widely held entities. It is another measure that my colleague the member for Dickson announced last year. It is a sensible measure which we support. It will ensure that shareholders in widely held companies and unit holders in widely held trusts are not disadvantaged when their interests in the entity are cancelled. The current position is that the market value substitution rule will replace the actual market proceeds received, say on a cancellation, with the market value of the equity where the capital proceeds are more or less than the equity’s market value. What the former coalition government wanted to ensure was that the equity owner would be taxed on a capital gain based on the amount agreed to be paid to them, not on some other value that they did not receive following the cancellation. The measure will also simplify the current legislation that applies to transactions or dealings covered by this type of capital gains tax event.

The fourth schedule supported is the Endeavour Research Fellowships and Executive Awards. Both the research fellowships under the Endeavour Awards and the amounts received under the Endeavour Executive Awards comprised a number of payments. The tax rules resulted in some complexity. I will not go through it all in great detail, but under this measure, which as I said we support, amounts received from research fellowships under the Endeavour Awards or from the Endeavour Executive Awards will be exempt from tax from 2007-08 regardless of whether the recipient is a full-time student.

The fifth schedule deals with early completion bonuses for apprentices. The coalition gave strong support to apprentices and technical education. In government we recognised that a trade or a technical career should be seen as a highly valuable, satisfying and rewarding career. When we came to government back in 1996, there were some 154,800 apprentices in training. By March 2007 the number of apprentices in training had risen to 414,300, an increase of 168 per cent. We had established 21 Australian technical colleges around the country. The Australian technical colleges allowed students to complete their final years of high school while at the same time starting down the track of an apprenticeship that would allow them to work towards a successful and rewarding career. This support for apprenticeships was backed by an increase in investment in vocational and technical education from $1.1 billion to $2.9 billion, an 87 per cent increase in real terms. As further evidence of this support, which I think it is fair to record, the coalition announced in 2007 that the first $1,000 of an early completion bonus paid to an apprentice would be exempt from tax. The measure in schedule 5 of the bill will carry this decision into effect. It was part of the suite of measures we had designed to support technical education.

Early completion bonuses are payable under schemes offered by a state or territory. A bonus serves to reward an apprentice who completes their apprenticeship more quickly than normal and the bonuses should also go some way to reducing skills shortages in the trades. Regulations will prescribe what kinds of occupation are eligible for the early completion bonus tax exemption so that skills shortages are addressed in the relevant time frame. I note that currently an early completion bonus is available only from the Queensland government and I note that the government intends to list the Queensland early completion bonus scheme in regulations as soon as the bill receives royal assent.

The sixth schedule relates to deductible gift recipients. I will not go through each of them, but each of the deductible gift recipients named in the schedule is very worthy of public support and, as I have said, we support this measure.

I now want to turn very briefly to the additional non-controversial elements of the original Tax Laws Amendment (2008 Measures No. 1) Bill. They also contain very sensible measures, which we are pleased to support. These measures also had been introduced by the former government last year but had lapsed due to the election. The first one is tax-free super for the terminally ill. I am particularly pleased to support the taxation exemption for superannuation payments to the terminally ill. When the member for Dickson announced this policy last year, he stressed that it is very important for parliament to seek to remove as many stresses and challenges as possible for people who are facing this terrible prospect. In particular, he mentioned the story of Christina Fiddimore, who unfortunately passed away recently because of breast cancer. She had wanted to ensure that she was not a financial burden on her family during her difficult fight with breast cancer but could not access her superannuation tax free. The government and the opposition were very cooperative and there is strong bipartisan support for this measure. I take this opportunity to extend condolences to Ms Fiddimore’s family. This measure will mean that when someone is faced with a terminal illness they will be able to access their superannuation in the form of a tax-free lump sum.

The next schedule deals with capital expenditure for the establishment of carbon sink forests. We are pleased to support this measure, which provides for the establishment of a deduction for capital costs incurred in establishing carbon sink forests. This will provide an incentive for the planting of trees, which is, I think we all agree, a very welcome development.

The next schedule is a tax offset for those affected by the equine influenza outbreak. It provides for an extension of the beneficiary tax offset to equine workers. The measure will help support those many low-paid workers and sole traders who have lost their jobs and have lost substantial income because of the equine influenza outbreak last year. The purpose of this measure is to add a tax offset to the wage supplement that was given. This will mean that those affected by equine influenza will be able to receive ongoing support.

There are two more schedules. One deals with tax relief for grants issued under the Tobacco Growers Adjustment Assistance Program, which is also very important. Where a tobacco grower undertakes to exit the industry, the grant that they will receive for doing so will be tax free. The grants will be up to $15,000. It is a measure that was introduced earlier but had lapsed because of the election.

Finally, there is the Farm Management Deposits scheme. This is a largely administrative measure that seeks to better realign tax law with other government guidelines as to which geographical areas and which primary producers in those areas are subject to exceptional circumstances. I believe that those clarifications are needed and it is important that they are now made.

These omnibus bills are always quite complex in the way in which they have to be dealt with, put together and thought through. It is very important that the tax law continues to be amended to either address anomalies or to make provision for circumstances such as some of the ones that I have outlined in my brief remarks. I am very pleased to see these bills brought to the Senate, and the opposition wholeheartedly supports them.