House of Representatives

Taxation Laws Amendment Bill (No. 3) 1989

Taxation Laws Amendment Act (No. 3) 1989

Second Reading Speech

by the Minister for Industrial Relations and Minister Assisting the Treasurer the Hon. Peter Morris, M.P. I move that the Bill now be read a second time.

This Bill amends the taxation laws in a number of respects and in addition will remove some 180 pages of redundant provisions of the income tax law.

Three outdated tax-related Acts will also be removed from the statute books.

The Bill contains measures to apply after today to specifically tax gains and allow a deduction for losses on the disposal of traditional securities.

As announced on 22 November 1988, the exemption from capital gains tax for a taxpayer's sole or principal residence is to be extended to make sure that it covers those residing in retirement villages and the like.

The Bill extends the exemption from income tax of maintenance payments received by a wife or former wife to maintenance payments received by a spouse, former spouse, de facto spouse, former de facto spouse or by or on behalf of a child.

Other amendments in the Bill ensure that a minor who is in receipt of a child disability allowance or is a disabled child will not be subject to the special anti-avoidance measures that deal with the unearned income of unmarried minors.

The level of beneficiary rebate for 1988-89 will be increased from $260 to $262.

Gifts to funds for the relief of persons affected by the earthquakes in Armenia and to the Australian Ireland Fund are to be allowable income tax deductions.

The taxation secrecy provisions are to be amended to allow the Commissioner of Taxation to disclose tax information to specified law enforcement agencies in certain circumstances, and to the Australian Customs Service. Finally, the Bill makes some minor technical amendments to the tax laws.

I turn now to a more detailed discussion of these measures.

Redundant Provisions The Government is conscious of concerns expressed over the volume and complexity of tax legislation with which taxpayers, tax administrators and other users must cope.

Much of this legislation has been directed at curbing the excesses of the tax avoidance era that we inherited in 1983, and at creating a fairer taxation system.

As part of this overall process, the Government is committed to improving the tax laws and to responding to constructive criticism of these laws.

In that vein, this Bill will slash some 180 pages of redundant provisions from the Income Tax Assessment Act 1936 .

Further changes of this kind will follow.

Honourable Members will also continue to see the adoption of a simpler drafting style in new tax laws, and the gradual revision of their provisions that could be expressed more clearly.

It must be remembered, however, that all developed countries have complex laws - including tax laws - which necessarily reflect the complexity of commercial affairs.

Indeed, some laws must be complex, if only because those out to exploit them do not shy from complexity in what they do.

This ongoing process of law improvement, which will involve consultation with practitioners and industry groups, will ensure continuing progress in a key element of our tax reform program.

The whole Australian community can only benefit from this initiative.

Taxation of Traditional Securities This Bill introduces new rules to apply after today for the taxation of traditional financial securities not being securities issued at a discount to which the accruals provisions of Division 16 of the Income Tax Assessment Act 1936 apply.

Under the existing law certain gains and losses on the disposal or redemption of traditional securities are dealt with under the capital gains and capital losses provisions. This Bill excludes from the operation of those provisions gains or losses on the disposal or redemption of traditional securities acquired after today.

Instead, under specific measures included by this Bill, the future m tax treatment of gains and losses on the disposal or redemption of traditional securities will be dealt with under the general income tax law.

The amendments will result in a small but unquantifiable gain to revenue.

Capital Gains Principal Residence Exemption The Bill will give effect to the proposal announced on 22 November 1988 to extend to units in retirement villages and similar accommodation the exemption from the tax on capital gains for a taxpayer's sole or principal residence.

The amendment will apply from 20 September 1985, the date of first effect of capital gains tax.

Maintenance Payments The income tax exemption available for periodical payments of maintenance received from a husband or former husband will be extended to include payments received, on or after 1 July 1988, from a wife or former wife, or by a person from a de facto spouse or former de facto spouse.

Periodical payments of child maintenance received by or on behalf of a child will also be exempt from tax.

A related measure will ensure that an income tax deduction is not available for expenditure or payments in respect of maintenance of a spouse, de facto spouse, or a family member under 16 years of age.

The annual cost to revenue of these amendments is estimated to be $100,000.

Taxation of Unmarried Minors This Bill will amend the special provisions dealing with the unearned income of unmarried minors which is taxed at the top rate of personal tax.

The changes take account of an amendment of the Social Security Act 1947 which replaced the handicapped child's allowance with the child disability allowance. The amendments made by this Bill will ensure that a minor in receipt of a child disability allowance or who is certified by a medical practitioner as being a disabled child will not be subject to the special provisions.

These amendments cover all payments of the new allowance, which began on 15 November 1987.

Beneficiary Rebate A small adjustment, from $260 to $262, is being made to the level of the beneficiary rebate available for certain single taxpayers in 1988-89, so that no tax will be payable on taxable incomes up to $6,192.

The rebate will shade-out where taxable incomes exceed the $6,192 threshold and will shade-out completely where a person's taxable income is $8,288 or more.

This adjustment, which ensures that persons wholly dependent on specified Commonwealth benefits or allowances do not pay income tax, is estimated to cost $200,00O in 1989-90.

Gifts As announced on 16 December 1988, gifts to a public fund for the relief of persons affected by the earthquakes in Armenia made on or after 8 December 1988 and before 1 July 1989 will qualify for tax deduction.

The revenue cost of this proposal is estimated at $500,000 in 1989-90.

Gifts to the Australian Ireland Fund will qualify for tax deductibility from today at a cost of $50,000 in a full financial year.

Access to Taxation Information Amendments to the taxation secrecy provisions contained in this Bill will permit the Commissioner of Taxation to provide taxation information to certain law enforcement agencies.

The authorised law enforcement agencies are the Australian Federal Police, State and Northern Territory police forces, the Director of Public Prosecutions, the National Crime authority and State and Territory Corporate Affairs Commissions.

The legislation contains tight controls on the use that may be made of any information provided by the Commissioner. s.

The amendments will allow the Commissioner to disclose taxation information to authorised law enforcement agency officers only where he considers that the information is relevant to establishing whether a serious offence - that is, an indictable offence - has been committed.

The information may only be used for intelligence purposes.

The amendments also allow the Commissioner of Taxation to release taxation information relating to a person convicted of a , serious offence for evidence purposes for a post conviction proceeds of crime proceedings.

The Commissioner will be required to disclose in his Annual Report to this Parliament, in respect of each broad category of offence, the number of requests for information by each law enforcement agency and the number of occasions on which information has been provided to each agency.

The taxation secrecy provisions are being further amended to permit the Commissioner to provide taxation information to the Comptroller-General of Customs.

The requirements of secrecy applying to taxation officers and other persons privy to confidential taxation information will, of course, extend to persons to whom taxation information can be communicated under these amendments.

I present the Explanatory Memorandum, which contains more detailed explanations of the provisions of this Bill.

I commend the Bill to the House.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).