Second Reading Speech
This Bill amends various taxation laws to implement a range of improvements to Australia's tax laws.
Schedule 1 amends the income tax law to ensure the 'stakeholder' and 'connected entity' tests work appropriately. Broadly, the connected entity test and stakeholder tests seek to determine whether an entity controls or can influence another entity.
These amendments ensure that entities with common stakeholders cannot inappropriately defer capital gains tax liabilities and prevent circumstances where medium and large businesses could access the small business concessions by breaking their operations up into several small entities.
Schedule 1 also ensures that these integrity rules (and the capital gains tax provisions more generally) work appropriately for certain asset-holding arrangements. Specifically, the rules will 'look through' these arrangements and apply as if absolutely entitled beneficiaries, bankrupt individuals, companies in liquidation and security providers are the owners of relevant assets.
Schedule 2 to this Bill exempts from income tax the Disaster Income Recovery Subsidy paid to individuals adversely affected by the January 2013 Tasmanian bushfires, and by ex-Tropical Cyclone Oswald and associated floods in Queensland and New South Wales during early 2013.
The Queensland and New South Wales floods and the Tasmanian bushfires have had devastating consequences for affected communities.
The Australian Government is giving employees, small business owners and farmers a helping hand by providing Disaster Income Recovery Subsidy payments to individuals adversely affected by natural disasters. At this difficult time, it's important that these payments are not subject to tax.
Exempting these payments from tax maximises the value of the payments for people affected by recent disasters. It also ensures that the payments are treated in the same way as previous disaster assistance payments, such as those made in the wake of cyclone Yasi in 2011.
Schedule 2 to this Bill also exempts any future Disaster Income Recovery Subsidy payments that the Government may make for natural disasters that occur up to 30 September 2013.
Schedule 3 extends the general Deductible Gift Recipient categories in the gift provisions of the Income Tax Assessment Act 1997 to include public funds established solely for the purpose of providing ethics education in government schools. The ethics education must be provided as an alternative to religious instruction and be in accordance with State or Territory law.
The amendment will allow taxpayers to claim an income tax deduction for donations made to funds that are endorsed by the Commissioner of Taxation and this will assist these entities in attracting funding for their activities.
Full details of all measures are contained in the explanatory memorandum.