Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary for Social Inclusion and the Voluntary Sector) Share this | Hansard source

I seek leave to table a correction to the explanatory memorandum relating to the Tax Laws Amendment (2009 Measures No. 4) Bill 2009.

Leave granted.

In summing up this second reading debate on the Tax Laws Amendment (2009 Measures No. 4) Bill 2009 I thank the members who contributed. It would probably benefit people who have been listening to this debate and those in the gallery, who might be wondering what this piece of legislation is all about, if I revisit for a minute and explain that the debate that we have heard from the National Party senators today goes to an amendment that is being proposed to this large piece of legislation.

Schedule 1 of this bill lifts the expenditure cap for access to the existing research and development tax offsets from $1 million to $2 million with effect from 1 July 2009. This measure provides a further boost to small pre-profit companies in research-intensive industries ahead of the introduction of the new R&D tax incentive in 2010-11. It also mitigates the incentive for firms to keep their R&D spending below the current expenditure cap.

Schedule 2 of this bill honours the government’s 2008 budget commitment to improve the integrity of prescribed private funds and to provide the trustees of such funds with greater certainty as to their philanthropic obligations. The government has recently consulted on draft guidelines, which will be shortly made into a legislative instrument. Following a thorough public consultation process, this schedule amends the Income Tax Assessment Act 1997, the Taxation Administration Act 1953 and A New Taxation System (Australian Business Number) Act 1999 to improve the integrity of prescribed private funds.

Schedule 3 of the bill amends the income tax law to provide relief from capital gains tax to members and insured entities of friendly societies that have either a life insurance business, a public health insurance or both and the society demutualises to a for-profit entity. Depending on how the friendly society chooses to demutualise, these entities do not easily fit within existing demutualisation regimes. These amendments will provide a broadly equivalent capital gains tax outcome for members and insured entities of these friendly societies relative to what members and policyholders of a stand-alone life insurance or private health insurer would receive if the insurer demutualised.

Schedule 4 amends the Income Tax Assessment Act 1997 to ensure that losses transferred to the head company of a consolidated group or a multiple entry consolidated group by a joining entity that is insolvent at the time of joining are not wasted. The head company will be able to apply the transferred losses in one of three ways. The loss can be applied to reduce a net forgiven amount under the commercial debt forgiveness rules. Alternatively, they can be applied to reduce a capital allowance that is adjusted under the limited recourse debt rules or to reduce a capital gain that arises when the joining entity subsequently leaves the group. As the amendments have been official to taxpayers, they apply from 1 July 2002—that is, from the commencement of the consolidation regime.

Finally, this bill includes minor amendments to the tax laws. The amendments ensure that the laws operate as intended by correcting some technical or drafting defects, removing anomalies and addressing unintended outcomes. The minor amendments are part of the government’s commitment to the care and maintenance of the tax law. Minor amendment packages now include addressing minor legislative issues raised by the public through the recently introduced tax issues entry scheme, or TIES for short. I commend this bill to the Senate.

Question agreed to.

Bill read a second time.