House of Representatives

Tax Laws Amendment (2005 Measures No. 3) Bill 2005

Second Reading Speech

Mr Brough (Longman-Minister for Revenue and Assistant Treasurer)

I move:

That the bill be now read a second time.

This bill amends various taxation laws to implement a range of changes and improvements to Australia's taxation system.

Firstly, the bill will implement a number of proposals to increase flexibility for charitable funds, ancillary funds and prescribed private funds, and hence further encourage charitable giving in Australia. The bill expands the concessions relating to the capital gains tax provisions, distributions by charitable funds, the income tax exemption for charities and the refund of franking credits provisions. The measure gives effect to the government's announcement in the 2004-05 budget.

The amendment in Schedule 2 to this bill is technical in nature and deals with the recently expanded foreign branch profits exemption. The expanded exemption, in conjunction with Australia's treaties, could have resulted in foreign branch income and gains derived from the operation of ships or aircraft in international traffic not being taxed in Australia or the country in which the company operates. Schedule 2 to this bill reinstates the way Australian companies with foreign branch income and gains from the operation of ships or aircraft in international traffic were taxed prior to the implementation of the expanded foreign branch income exemption. This will ensure that such amounts continue to be taxed in Australia.

The Commissioner of Taxation can release taxpayer information to certain law enforcement agencies, such as police forces and various crime commissions, if the commissioner is satisfied that the information is relevant to establishing whether a serious offence has been committed or to the making of a proceeds of crime order. The third measure will add the Corruption and Crime Commission of Western Australia to the list of law enforcement agencies to which taxpayer information can be provided.

The fourth measure will amend the Fringe Benefits Tax Assessment Act 1986 to make a technical correction. This will clarify that certain government institutions that are charitable institutions at law are not eligible for fringe benefits tax rebatable employer status from 1 July 2005. This amendment will ensure that the status quo is not changed.

Finally, this bill introduces a standard definition of a dependant: a child less than 21 years or a full-time student less than 25 years. This means there will be a single set of age criteria for the housekeeper, child housekeeper, medical expenses and zone tax offsets, as well as the Medicare levy and Medicare levy surcharge. It will provide consistency for taxpayers and will allow more taxpayers to access the dependant-related offsets, the concessional Medicare levy and Medicare levy surcharge thresholds offsets, and the Medicare levy and Medicare levy surcharge family thresholds.

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

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

Debate (on motion by Mr Fitzgibbon ) adjourned.