Second Reading SpeechBy Senator IAN CAMPBELL (Western Australia-Parliamentary Secretary to the Minister for Communications, Information Technology and the Arts)
-I table revised explanatory memoranda relating to the Financial Sector Reform (Amendments and Transitional Provisions) Bill (No. 2) 1999 and the Taxation Laws Amendment Bill (No. 8) 1999 and move:
That these bills be now read a second time.
I seek leave to have the second reading speeches incorporated in Hansard .
The speeches read as follows-
This bill makes amendments to the income tax law and other laws to give effect to the following measures:
The bill will amend the controlled foreign company (CFC) rules in the Income Tax Assessment Act 1936 to give effect to the Treasurer's announcement in the 1997-98 Budget to rectify a number of anomalies in the interaction of the CFC measures and the capital gains tax (CGT) provisions. These amendments ensure that capital gains made on tainted assets, deemed to be disposed of after the amendment of the measures on 13 May 1997 when a company leaves a wholly-owned company group, are included in the attributable income of the Australian resident controllers.
The amendments also enable those tainted capital gains to be taken into account when applying the active income test. In addition, the amendments will prevent taxpayers deliberately avoiding taxation of those capital gains by using schemes or arrangements intended to dilute the Australian taxpayer's attribution percentage in the CFC holding tainted assets that have previously received CGT roll-over relief.
This bill will amend the income tax law to exempt post-judgment interest in personal injury compensation cases from income tax, where the interest accrues from the time a judgment debt arises until all avenues of appeal have been exhausted. The amendments will apply from the 1992-1993 year of income. This will allow taxpayers who have already paid tax on post-judgment interest in recent years to obtain a refund.
The bill will amend the Income Tax Assessment Act 1936 to make a number of corrections to the franking credit trading and dividend streaming rules. These changes will apply from the commencement of the measures.
This bill amends the income tax law to deny tax deductions for bribes paid to foreign public officials. The Government is introducing this measure to support global moves to discourage bribery in international business transactions. The amendments are in response to the recommendation by the Organisation for Economic Co-operation and Development that member countries deny tax deductibility for bribes made to foreign public officials. The amendments will apply to the 1999-2000 year of income and later years of income. The gain to the revenue from the amendments is estimated to be insignificant.
The bill will provide taxation incentives for personal and corporate philanthropy in Australia.
These measures arise as a response to the report on philanthropy in Australia by the Business and Community Partnerships Working Group on Taxation Reform. The measures were announced on 26 March 1999 by the Prime Minister, the Treasurer and the Minister for Family and Community Services.
In Tax Reform: not a new tax, a new tax system: The Howard Government's Plan for a New Tax System the Government announced changes to the taxation treatment of life insurers that are proposed to commence from the 2000-2001 income year. The details of the changes to the taxation of life insurers are being developed as part of the Review of Business Taxation.
As the law currently stands, the rate of tax on the eligible insurance business of friendly societies is scheduled to increase from 33 per cent to 39 per cent for the 1999-2000 and subsequent income years. However, pending the results of the Review of Business Taxation, this bill will retain the rate of tax for the eligible insurance business of friendly societies at 33 per cent for the 1999-2000 income year.
The bill will amend the Income Tax Assessment Act 1936 and associated tax laws to ensure that distributions of share premium are within the ambit of certain anti-avoidance rules known as the capital streaming and dividend substitution rules. The bill also makes some minor technical and clarificatory changes to ensure that other provisions operate as intended.
The amendment to include distributions of share premium within the ambit of the anti-avoidance rules will apply from the date of introduction of this bill. The other amendments will apply from 1 July 1998, the date of commencement of Taxation Laws Amendment (Company Law Review) Act 1998
There are minor technical amendments in the bill that improve the signposting to provisions in the income tax law dealing with excess tax offsets.
This bill gives effect to the Government's 1996-97 Budget announcement that the prior and current year loss, bad debt and debt/equity swap deduction rules for companies will be amended so that two concessional tracing rules that are available to trusts under the trust loss measures will also be available to companies. These amendments will apply to losses and debts incurred in the 1996-97 income year and later income years.
These rules were previously included in Taxation Laws Amendment Bill (No. 6) 1997 which was introduced into Parliament in October 1997 but lapsed because of the election.
Full details of the measures in this bill are contained in the explanatory memorandum.