Second Reading SpeechBY Treasurer, the Hon Peter Costello, MP
I move that the Bill now be read a second time.
This bill introduces fundamental reforms to the capital allowances system as part of the New Business Tax System. This system enables certain expenditures to be written off over time for income tax purposes.
These reforms, which represent a key element of the Review of Business Taxation's recommendations to reform the way in which depreciating assets are taxed, partly fund the lowering of the company tax rate from 36 per cent to 30 per cent.
In essence the reforms introduced by this bill:
- replace accelerated depreciation with effective life depreciation, except for small business taxpayers;
- allow taxpayers, except small business taxpayers, to reassess the effective life of a depreciable asset;
- remove depreciable assets from the capital gains tax regime;
- remove the option to offset the balancing charge upon disposal of a depreciating asset, except for small business taxpayers or involuntary disposals; and
- allow indefeasible rights to use to be depreciated.
These changes apply from 11.45 am on 21 September 1999.
Full details of the measures in this Bill are contained in the explanatory memorandum.
I commend this Bill and present the explanatory memorandum.