House of Representatives

Taxation Laws Amendment Bill (No. 1) 2002

Second Reading Speech

Mr Slipper (Parliamentary Secretary to the Minister for Finance and Administration)

That this bill be now read a second time.

The plantation forestry industry plays a vital role in the government's national forest policy. The policy supports the expansion of Australia's commercial softwood and hardwood plantations to provide an economical, reliable and high quality wood resource for industry. The policy is an important strategy for the ecologically sustainable development of Australian forests.

This bill includes a measure to stimulate investment in plantation forestry managed agreements, by providing an immediate tax deduction for specific prepaid expenditure invested in one of these agreements. It will apply to the component of the investment that relates to seasonally dependent agronomic activities occurring during the establishment period. The prepaid activities will have to be completed within 12 months of the activity commencing and by the end of the following income year. At the same time, managers of these investments will have to include the prepayments in assessable income in the year in which the investors can claim the deductions, rather than when the work is done.

Without this stimulation, there is concern that plantation targets for the sustainable development of Australia's forests would not be met.

The bill also includes an amendment to the non-commercial losses rules, to remove an unintended limitation on the Commissioner of Taxation's discretion under the rules. The amendment will allow the commissioner's discretion to be exercised in all the relevant years where this is consistent with the nature of the business activity, regardless of whether a profit is made or one of the tests has been met on a one-off basis during that time. This has particular relevance for the plantation forestry industry, where normal practices such as thinning may produce a one-off profit or passing of a test.

I commend this bill to the House and I present the explanatory memorandum.

Debate (on motion by Mr Zahra) adjourned.