10-February-2005
Speeches, Law and Order
Mr ROBB (Goldstein) (11.05 a.m.) —This omnibus bill, the Tax Laws Amendment (2004 Measures No. 6) Bill 2004, including a diverse range of tax amendment measures, has one unifying theme: it continues the Howard government's reputation for progressive taxation reform—a reputation for improving the efficiency of the tax system, for improving the fairness of the tax system and for providing constructive incentives within our tax system. In that sense, I welcome the support of the opposition, as has just been indicated by the previous speaker. In doing so, I take issue with the member for Hunter over his misleading comments about the state of our tax system. He conveniently ignored the fact that our tax system was materially affected by 13 years of neglect during the Labor regime.
The Labor government ducked the hard decisions—decisions such as introducing a wide-ranging goods and services tax. That meant that the Labor government presided over a very narrow tax base, which was a huge disincentive to growth in our economy and was unfair and inefficient. It meant that the Howard government has had a major task, tackling the tax mess left by 13 years of Labor. It has been an ongoing task, and this bill is just one element of that. The facts are that the changes to our taxation system, courageously undertaken by the Howard government, are one of the drivers of the great and enduring economic performance that we are benefiting from at the present time.
Moving to the provisions of the bill: firstly, the government is continuing with its roll-out of consolidations. As part of its reforms to improve the business environment, the government has enabled groups of companies and other entities to lodge tax returns as though they were a consolidated entity, so avoiding a series of expensive lodgments. The first stage of these consolidations, which was a very innovative measure, was introduced in 2001. The amendments in this bill provide for greater flexibility and certainty in the consolidation membership and loss rules, in this case with a particular focus on the mining industry.
The second measure in this bill ensures that copyright-collecting societies are not taxed on income they collect on behalf of members. The tax should be paid by the author, and this measure seeks to do just that. The third measure has to do with continuing the implementation of the simplified imputation system, which is another significant initiative as part of the government's streamlining of business tax in 2001. The simplification system is being rolled out in tranches, and these amendments usefully correct cross-references, replacing the language of the old imputation system with the language of the new imputation system.
The fourth measure in this bill expands the list of organisations eligible to be tax-deductible gift recipients, including special government schools for students with permanent disabilities, state emergency services and country fire authorities. I think these are worthy additions to the list of those qualifying for tax-deductible gifts, and this should be a significant boost to fundraising. It has been a priority of the Howard government to further promote a culture of giving for worthy causes, with a particular emphasis on business. The response to the tsunami demonstrates the big heart of the general Australian community and of business. These additions I think will further encourage and reinforce this generous capacity within our community.
The fifth measure seeks to extend to 30 June 2005 the existing transitional period in the debt-equity rules for at-call loans. The transition is designed to effectively allow deductions of interest paid, as the at-call loan will be treated as being on the revenue account. In effect, this amendment will give people an extra year to get their existing loans in order. As we are typically dealing with small business owners, this measure takes into consideration the time and resource pressures on our small business community.
The sixth measure takes the series of accelerated deductions available to primary producers for water facilities and land care and extends this series of accelerated deductions to the irrigators and rural water providers who are dealing with primary producers. It means that things like pumps, irrigation channels, windmills et cetera can be written off over three years rather than over the life of the asset. In regard to land care operations, full costs will be able to be claimed. These measures will provide a very important encouragement for the renewal of water supply infrastructure right around our rural community. They represent an important addition to the armoury of initiatives being taken and considered to address Australia's water problems.
The seventh measure extends exemptions from FBT and corrects some anomalies—such as that which occurred if a person bought a new home before selling the old—in regard to relocation for work purposes. The exemption from FBT will now be extended to cases where the new home is bought before the old one is sold.
The eighth measure amends capital gains tax law so that others besides the liquidator can declare shares and other equity interests in a company worthless for capital gains tax purposes, allowing taxpayers to claim a capital loss.
The ninth measure removes an anomaly relating to the GST. Currently, a property owned by a non-resident can get services to the property GST free, but if an Australian resident owns the property then services are not GST free. So this anomaly is being addressed, enabling non-residents to be taxed, to be put on a par with Australian residents.
The 10th measure relates to the baby bonus. It puts adoptive parents on the same footing as other parents. Usually, an adopted child might be with the adoptive parents for some months or even a year before the adoptive parents are legally the child's parents, so they have often incurred a lot of significant costs. This amendment simply allows adoptive parents, once they become legally responsible for a child, to lodge a retrospective claim.
Apart from some technical corrections, the final measure involves the transfer of life insurance business. The taxation of life insurance has its own regime, as is well known. Tax is struck on the difference between premiums received and claims—that is, it is struck on a margin rather than on gross income. As a consequence, this amendment concerns itself with companies that are merging or where a life insurance book is being moved from one company to another within a group. The amendment removes a lot of tax consequences that would otherwise have occurred at a point of transfer—for example, the rollover of capital gain.
Many of these measures are self-evident. They are an important addition to the years of very constructive changes that have been made by the Howard government. They continue that process, and there are more in the pipeline. This bill further enhances the reputation of this government for improving the efficiency and fairness of the tax system and its reputation for providing constructive incentives within our tax system for a range of activities within our community. I commend the bill to the House.