House of Representatives

Income Tax Assessment Bill (no. 3) 1971

Income Tax Assessment Act (no. 3) 1971

Second Reading Speech

By the Hon. A.S. Peacock, M.P., Minister Assisting the Treasurer.

The principal amendments to the law proposed by this Bill will give effect to the personal income tax concessions announced in the Budget Speech.

By one proposal, the upper limit of the amount that may be allowed as a deduction to a taxpayer for expenditure incurred by him in the education of a full-time student will be increased from $300 to $400 a year.

By a second proposal the age below which a full-time student may qualify as a dependant for whom a taxpayer is entitled to the "maintenance" deduction will be raised from 21 to 25 years. The deduction for expenses paid in respect of the education of a full-time student will also be available where the student is less than 25 years of age instead of 21 as at present.

Under a third proposal a concessional deduction will be available for legal expenses and fees incurred by taxpayers in adopting children. It is proposed that a taxpayer who adopts a child will be allowed an income tax deduction for amounts expended in connexion with the adoption by way of solicitors' or barristers' fees, fees paid to a court granting the adoption order and fees paid to a Government department or authority or to an approved adoption agency through which the adoption is arranged.

The Bill also proposes an amendment of the gift provisions of the Income Tax Law to authorise the allowance of deductions for gifts of $2 and upwards to the Productivity Promotion Council of Australia. This Council has largely taken over the role of the Australian Productivity Council and the proposed change to the gift provisions recognises this. Gifts to the Australian Productivity Council will no longer be deductible.

These amendments are all to apply to assessments based on income derived in the 1971/72 and subsequent years.

Other amendments proposed by the Bill will give effect to certain income tax exemptions provided for in the Agreement between the Australian and United States Governments relating to the establishment of the Joint Defence Space Communications Station at Woomera. Honourable members will recall that the present law contains exemptions provided for in earlier Agreements relating to other joint projects of the two countries in Australia. The amendments proposed will extend to the Joint Defence Space Communications Station the exemptions now authorised in respect of those projects. Broadly speaking, the relevant provisions exempt from our income tax income derived in Australia by certain United States employees, contractors, sub-contractors and their employees from work done on the projects, so long as the income is subject to United States tax.

Technical aspects of the Bill are given in a memorandum to be circulated to Honourable Members. I commend the Bill to the House.