Second Reading SpeechMr Dutton (Minister for Revenue and Assistant Treasurer)
That this bill be now read a second time.
The Tax Laws Amendment (2007 Measures No. 2) Bill 2007 implements a number of changes and improvements to Australia's taxation system.
Schedule 1 to this bill contains technical corrections and amendments to the uniform capital allowances system to more closely align the decline in value deductions for mining, quarrying and prospecting rights with other depreciating assets.
This measure will ensure that the provisions in the tax law for these rights operate as the government intended.
Schedule 2 to this bill will improve the fairness of the taxation rules that apply to income earned from certain boating activities, while ensuring that the tax system cannot be used to subsidise the private use of boats.
The current law generally denies income tax deductions for expenses incurred in holding or using a boat, other than expenses incurred by specified types of boating business, such as a ferry service. However, the current law still taxes all boating income.
The measures in schedule 2 to this bill implement the government's decision to allow taxpayers to deduct expenses denied under the current rules, up to the amount of boating income earned. Excess deductions will be able to be carried forward and deducted against boating income in future years. GST input tax credits may also be available for these expenses, provided the requirements in the GST law are met.
Schedule 3 to this bill ensures the law reflects the government's original policy intent for the refundable research and development (or R&D) tax offset for small and medium businesses. It also ensures the law reflects the government's intent with regard to the 175 per cent premium incremental concession for additional labour-related expenditure on R&D.
These amendments will improve the operation of the R&D tax offset by extending the time companies have to choose the offset. They will also allow companies to object to decisions made by the Commissioner of Taxation, regarding the allowable amount of the offset.
The amendments ensure that the existing exception to the minimum expenditure of $20,000 for contracted expenditure to a registered research agency, applies to both R&D tax deductions and the R&D tax offset. The amendments also ensure that all companies in a group are covered by the R&D tax offset provisions.
These amendments will improve the operation of the 175 per cent premium incremental concession by ensuring that a premium deduction amount can be allocated to all companies in a group that have increased R&D expenditure over their three year average.
Schedule 4 gives effect to the government's announcement in the 2006-07 budget to extend the gift provisions to promote philanthropic giving by allowing taxpayers to claim a tax deduction for the donation of certain publicly listed shares to deductible gift recipients.
Schedule 5 will amend the list of deductible gift recipients in the tax legislation. Deductible gift recipient status will assist the listed organisations to attract public support for their activities.
Schedule 6 to this bill amends the tax legislation by extending the eligibility for tax deductions for contributions to deductible gift recipients, where an associated minor benefit is received with an eligible fundraising event.
The improvements to the taxation deductibility provisions provide further support to encourage philanthropy in the community, and the government is very proud to support those activities.
Schedule 7 makes technical corrections and amendments to the income tax law related to exempt entities. It will ensure public ancillary funds and prescribed private funds do not lose their income tax exempt status when they distribute money to Commonwealth, state or territory bodies which are exempt from tax and are also deductible gift recipients. Examples of such bodies are the National Gallery of Victoria and the Sydney Opera House.
Schedule 8 amends the venture capital regime in the tax law. These amendments relax the eligibility requirements for foreign residents investing in venture capital limited partnerships and Australian venture capital funds of funds. They also introduce a new set of taxation concessions for Australian residents and foreign residents investing in early stage venture capital activities. This is achieved through a new investment vehicle called an early stage venture capital limited partnership.
Changes to the venture capital regime were announced in the 2006-07 budget as a package of measures aimed at increasing activity in the venture capital sector. This measure addresses key findings of a review into Australia's venture capital industry. It further demonstrates the government's ongoing support for new business ventures and the promotion of industry innovation.
Full details of the measures in this bill are contained in the explanatory memorandum. I commend the bill to the House.
Debate (on motion by Mr Edwards) adjourned.