Taxation Laws Amendment Bill (No. 10) 1999

Second Reading Speech

By Senator IAN CAMPBELL (Western Australia, Manager of Government Business in the Senate)


This Bill makes amendments to the income tax law and other laws to give effect to the following measures:

Restructuring of certain managed investment schemes

Taxation Laws Amendment Act (No. 7) 1999 provided taxation relief to a managed investment scheme and its members where it becomes a registered scheme in accordance with the Managed Investments Act 1998.

The amendments in this Bill will provide further taxation relief to a person who either becomes a member or ceases to be a member of a scheme that makes more than one qualifying change.

The taxation relief will apply from 1 July 1998 to 30 June 2000 - this is the same period that a managed investment scheme has to register under the Managed Investments Act 1998.

Film licensed investment companies

This Bill will amend the Film Licensed Investment Company Act 1998, the Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 to allow a Film Licensed Investment Company (FLIC) to make returns of concessional capital as frankable dividends. This Bill will also make a few technical amendments that will improve the clarity of the legislative structure governing FLICs.

This measure will prevent there being double taxation on returns of concessional capital made by the Film Licensed Investment Companies.

Income tax deductions for gifts etc.

The Bill will amend the income tax law to allow deductions for gifts made to The Linton Trust. The Linton Trust was established to provide assistance to the families of five firemen who died fighting bushfires in Victoria on 2 December 1998. Gifts made to the Trust after 2 December 1998 and before 3 December 2000 will be deductible.

The amendments will also be made to extend, for a period of 4 months, the time within which donations to The National Nurses' Memorial Trust will be tax deductible. An extension of time has been granted to the Trust so that it can raise additional funds for the construction of the memorial.

In addition the amendments will also give tax exempt status to non-profit organisations which promote the development of fishing and/or aquacultural resources. The income tax law grants income tax exempt status to non-profit organisations that promote the development of a number of primary and secondary industries. The Government believes that fishing and/or aquacultural organisations should receive the same taxation concessions. The exemption will apply from the 1999-2000 and later years of income.

Cyclones Elaine and Vance Trust Account etc.

This Bill will ensure that business recovery grants paid by the Cyclones Elaine and Vance Trust Account to eligible businesses in the affected areas are exempt from income tax. The decision to make grants exempt from income tax in the hands of the recipient recognises the extraordinary hardship inflicted by the cyclones and the threat to the communities' recovery prospects of businesses being unable to re-establish. The exemption will apply for the 1998-99 and 1999-2000 income years.

Mining and quarrying: balancing adjustments

This Bill gives effect to the Government's announcement in a Press Release of 3 December 1998 that the tax treatment on disposal of mining property is to continue to operate as it previously did prior to the decision of the Full Federal Court in Esso Australia Resources Ltd V FC of T.

The effect of the Esso decision is that capital expenditure that was not previously deductible under the capital allowance provisions while a mine was operating can now become deductible under the balancing adjustment provisions in the income year in which the mine is disposed of.

In accordance with the Press Release, the proposed amendment will apply to disposals of mining property which occur after 4pm AEST, 3 December 1998.

Transfer of interest in petroleum projects

This Bill will amend the Petroleum Resource Rent Tax Assessment Act 1987 to ensure that the Act operates as intended to permit taxpayers who abandon or walk away from a Petroleum Resource Rent Tax project, to take with them their share of any undeducted exploration expenditures.

The amendment will apply to taxpayers who walks away or abandons a project from the date of Royal Assent.

Full details of the measures in this Bill are contained in the explanatory memorandum.

I commend this Bill and present the explanatory memorandum.