Second Reading Speech
Mr Slipper (Parliamentary Secretary to the Minister for Finance and Administration)I move:
That this bill be now read a second time.
This bill reflects a continuation of the initiatives of the government to reform business taxation by amending the income tax law and other laws to give effect to the following measures.
The consolidation regime, which commenced on 1 July 2002, is an important and innovative reform that allows wholly owned corporate groups to be treated as single entities for income tax purposes. The consolidation regime is the product of extensive, ongoing and regular consultation with industry and business sector representatives.
This is the fourth and final tranche of the consolidation regime. The majority of the rules for the regime were contained in three earlier tranches of legislation: the New Business Tax System (Consolidation) Act (No. 1) 2002; the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002; and the New Business Tax System (Consolidation and Other Measures) Act (No. 1) 2002.
The consolidation regime will promote efficiency of business restructuring, improve the integrity of the Australian tax system and reduce ongoing income tax compliance costs for those wholly owned groups that choose to consolidate.
The measures contained in this bill deal with discrete and specialist areas of the tax law and their interaction with the consolidation regime. These discrete and specialised areas include the taxation of life insurance companies, take account of the special structure of multiple entry consolidated groups and consolidated groups owned through interposed foreign entities and the interaction of the consolidation regime and the general value shifting regime.
Consequential amendments and technical corrections are also made in relation to the existing consolidation provisions to ensure those provisions operate as intended.
This bill will insert further components of the simplified imputation system. These rules will complement the core rules for the simplified imputation system. The rules relate to venture capital franking, the transfer of membership status and machinery provisions, including those associated with franking returns, assessments and amendments.
The simplified imputation system is another of the government's business tax reform initiatives and gives companies more flexibility in franking dividends and reduces their compliance costs.
In addition, the bill will make a number of consequential amendments to the Income Tax Assessment Act 1936 that are required because of the simplified imputation rules.
The measures contained in this bill apply from 1 July 2002, the commencement date of the consolidation regime and simplified imputation system.
Full details of the measures contained in the bill are included in the explanatory memorandum. I commend the bill to the House and present the explanatory memorandum.
Debate (on motion by Mr Snowdon) adjourned.