Helen Coonan (NSW, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Hansard source

I rise to speak on the Tax Laws Amendment (2008 Measures No. 6) Bill 2009, which contains five schedules. Schedule 1 to this bill amends the Income Tax Assessment Act 1997 for the purpose of preventing a market value cost base being used when interests in an entity are acquired by another entity through a scrip-for-scrip capital gains tax rollover—that is, a restructure. Schedule 2 to this bill amends the Tax Administration Act 1953 for the purpose of correcting the legal and administrative barriers relating to debts that are removed from the foreign claims register. This schedule also provides for certain types of payments to be made by the Commissioner of Taxation to foreign countries.

Schedule 3 to this bill amends the Superannuation Guarantee (Administration) Act 1922. The purpose of this schedule is to expand the time period in which an employer can make a late superannuation contribution and still elect to use the late payment offset to reduce their superannuation guarantee charge obligation. Schedule 4 to this bill amends existing taxation laws to ensure the proper operation of the tax system by removing errors and anomalies within existing legislation. Schedule 5, which became part of this bill after a recent amendment in the other place, amends income tax and fringe benefits tax legislation for the purposes of ensuring that charities undertaking infrastructure reconstruction in areas affected by the Victorian bushfires will not lose their tax concessional status.

Schedule 1 implements the policy announcement made by the previous coalition government as a tax integrity measure to prevent capital gains tax avoidance. The former coalition government recognised that certain entities were undertaking a scrip-for-scrip CGT rollover and obtaining a market value cost base for shares in the acquired entity. The entities would then use the consolidation tax cost-setting rules to push the market value cost base into the underlying assets of the acquired entity. This device allows entities to reduce the capital gains when the assets are sold and increases the capital allowance deductions. In October 2007, the previous coalition government announced that it would introduce measures to prevent the intentional tax mischief relating to the resetting of tax values relating to scrip-for-scrip CGT rollovers.

The former coalition government also announced a commitment to undertake consultation with the business community to ensure that the operation of the legislation would be implemented correctly. The announcement reflects the coalition’s longstanding commitment to ensuring the integrity and correct operation of Australia’s taxation system. I therefore welcome the government’s decision to introduce these measures to prevent further abuse of Australia’s tax system.

Schedule 1 prevents entities from exploiting the rollover provisions, as I mentioned, and where a scrip-for-scrip CGT rollover is taken to be a restructure, entities will not be able to apply a market value cost base. The schedule will stop entities undertaking scrip-for-scrip CGT rollover restructures with the intent of reducing their capital gains tax liability from the disposal of the acquired entity’s assets. This is consistent with the intent of capital gains tax to apply to increases in value of capital assets.

Schedule 2 addresses the legal and administrative issues arising from deeming debts being removed from the foreign claims register. It also expands the types of payments the Commissioner of Taxation can make to other countries. It expands the types of payments from principal and general interest charge to allow the Commissioner of Taxation to pay other amounts that may need to be paid.

Schedule 3 amends the time within which an employer can make a contribution to an employee’s superannuation fund and be able to use that payment to offset the superannuation guarantee charge liability. This is important. It will encourage employers to be timely in making superannuation contribution payments.

Schedule 4 will make minor changes and alterations to the existing tax laws to promote their intended operation. As my colleague in the other place the member for Casey states: this is effectively a non-controversial, housekeeping amendment, and it is obviously supported.

As I said earlier, schedule 5 will ensure that charities can assist in rebuilding infrastructure damaged by the Victorian bushfires, without losing their status as charities. This is obviously very important in view of the recent tragic bushfires. It is a very welcome move, which was the result of a recent bipartisan amendment in the other place, as a means to assist those afflicted by the terrible fires in Victoria.

During the last parliament, the previous coalition government announced the substantive provisions that form part of this bill. The coalition’s support for this bill represents our commitment to protecting the integrity of Australia’s tax system. It has our support in this place, and I commend the bill.