Andrew Murray (WA, Australian Democrats) Share this | Hansard source

The Tax Laws Amendment (2008 Measures No. 2) Bill 2008 is an amended bill. We have a revised explanatory memorandum and there are some amendments coming through in the committee stage. But it is one of those measures that wrap up a lot of outstanding elements with respect to taxation law. Taxation law is such that it does continually need finetuning and adjustment. These measures are welcome as they update and improve the areas they address.

The schedules that are covered in the bill include amounts misappropriated by an employee or agent, extending the superannuation guarantee late payment offset, capital gains tax market value substitution rule for interests in certain companies and trusts, income tax exemption in the Endeavour executive awards and research fellowships under the Endeavour awards, early completion bonuses for apprentices, the usual update of deductible gift recipients, payment of a superannuation lump sum to a person with a terminal medical condition, capital expenditure for the establishment of trees in carbon sink forests, extension of beneficiary tax offset to the equine workers hardship wage supplement payment, tax-free grants for certain tobacco growers, and farm management deposits. That is a list that you can see is very eclectic. There is not much interrelationship between each of those; they stand on their own.

Schedule 1 proposes changes to the Income Tax Assessment Act 1997 to correct the inconsistent treatment of amounts misappropriated by an employee or agent following the disposal of an asset that has been dealt with under the uniform capital allowance provision, which, under current law, fails to recognise the loss of economic benefit experienced by the taxpayer arising from the misappropriation. These amendments will effectively enable CGT events and uniform capital allowances to be written down to reflect the misappropriated loss. The explanatory memorandum says the compliance cost impact will be negligible and the financial impact is unquantifiable. With that, we should not be frightened that it is going to cost a motza; it will not. These measures will only apply to amounts misappropriated in the 2007-08 and later income years.

Schedule 2 is welcome. It extends the superannuation guarantee late payment offset to remove the double-payment provision that currently exists within superannuation law. Under present conditions, employees who make late superannuation guarantee payments are penalised by being required to pay a superannuation guarantee charge, which includes a contribution shortfall amount, a nominal interest component and an administration charge. However, late payments cannot presently be used to offset the contribution shortfall amount included in the superannuation guarantee charge, thereby heavily penalising late paying but well-intentioned employers. According to the EM, the financial and compliance costs are expected to be negligible. This is a fairness and equity measure.

Schedule 3 proposes amendments to the Income Tax Assessment Act 1997 to exclude the market value substitution rule from capital gains tax events involving holdings, in widely held companies or unit trusts, which are cancelled, surrendered or brought to an end in similar ways. This ensures that there is an equitable taxation outcome for affected individuals, who would otherwise potentially face a tax bill larger than the proceeds of the aforementioned cancellation. Small compliance costs are expected from this amendment and ongoing compliance costs are forecast to be minimal. The EM again says that the financial implications are unquantifiable. Again, I would suggest that you not fear that statement. It does not presage a high cost. And again I say to you that this is both an equity and a fairness measure, and it will simplify the law.

Schedule 4 amends the Income Tax Assessment Act 1997 to facilitate the income tax exemption of scholarship funds received through the Endeavour executive awards, including research scholarships. This award is an internationally competitive, merit based scholarship program, administered by the Department of Education, Employment and Workplace Relations, for bringing leading researchers, executives and students to Australia to undertake study and research and professional development, with reciprocal arrangements abroad for Australians.

Schedule 5 amends the Income Tax Assessment Act 1997 to exempt early completion bonuses paid by state or territory governments to apprentices for the early completion of apprenticeships in skill-shortage occupations. The forecast cost to revenue over the forward estimates is $8.7 million. The logic behind the exemption of an apprenticeship bonus from income tax is questionable in light of the fact that an early completion of a course facilitates the apprentice to work for higher wages. Thus one could argue that there is sufficient financial motivation for early completion, besides the payment of a bonus. The loss of revenue associated with this schedule could arguably be better used in promoting greater uptake of apprenticeship positions, or in the financing of additional apprenticeship places. So, I am lukewarm about this schedule but I am certainly not going to oppose it. I think it is probably unnecessary, but the apprentices will love it because it gives them some extra dough.

Regarding the deductible gift recipients list, the proposals have retrospective application but that is of benefit to those concerned so I have no objection. But I would take this opportunity, while briefly commenting on schedule 6, to recommend to both the government and the opposition that they look carefully at the Democrats notice of motion in my name and in the name of Senator Allison, which is to be considered later today. It deals with referring the issue of not-for-profits and charities to a Senate inquiry. This area of law to do with the administration and management of not-for-profits and deductible gift recipients, I think, needs reform. The previous government thought it needed reform and failed with its attempts at that time. A Senate review process is a proper one to re-address this issue. I would recommend, particularly to the opposition, since they have the numbers and control of the Senate—and I hope the shadow minister, Senator Coonan, is listening to me carefully—is she?