Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Hansard source

I would like to thank all the members who have taken part in this debate on the Tax Laws Amendment (2006 Measures No. 4) Bill 2006. I thank the member for Kennedy for his passion and his contribution to this bill as well.

Schedule 1 to this bill makes amendments to ensure marriage breakdown settlements do not give rise to capital gains tax liabilities. It expands existing CGT rollover relief on marriage breakdown to assets transferred under a binding financial arrangement or an arbitral award entered into under the Family Law Act 1975.

Schedule 2 of this bill corrects an unintended consequence of a consolidation integrity measure. The measure in this bill ensures that the integrity measure does not inappropriately prevent companies from accessing the rollover in certain circumstances. It would be appropriate for the integrity measure to apply to a company that has demerged and subsequently becomes part of a consolidated group for consolidation tax cost-setting purposes. In these circumstances, the assets are transferred to facilitate the demerger rather than to artificially increase the tax cost of assets for consolidation purposes.

Schedule 3 to the bill amends the simplified imputation system to ensure that Australian companies receive franking credits attached to non-assessable, non-exempt distributions from New Zealand companies. Schedule 4 to this bill implements reforms to Australia’s international taxation arrangements as part of an ongoing process to ensure that Australia has an internationally competitive tax system. The reforms align Australia’s domestic law with the approach adopted in Australia’s tax treaties and with international norms.

The government is moving two amendments to this bill as circulated. The first of these resets the cost base of indirect Australian real property interest not previously taxable for foreign residents to the market value of such interest on 10 May 2005—the date that the Treasurer announced the measure. This will ensure that unrealised accumulated capital gains or capital losses from interest in land-rich foreign interposed entities not previously within Australia’s tax regime will not be subject to CGT. The second of the amendments corrects an unintended narrowing of the availability of demerger relief for resident taxpayers. It also ensures the rollover relief for demergers interacts appropriately with the CGT and foreign residents measure in this bill. Without this amendment, the rollover relief to defer CGT consequences under a demerger may be denied for Australian residents unless a company is majority Australian owned or the company is land rich.

Before I conclude, I want to address a couple of issues that were raised by members opposite. Firstly, issues were raised by the member for Hunter and the member for Werriwa regarding parliamentary amendments and legislative amendments. The member for Hunter complained about the number of parliamentary amendments to tax bills in recent times. What he failed to mention in his reference to this matter was that the fact that we are moving a number of amendments shows that the government are focused on working with stakeholders in relation to taxation issues. We are willing and able to act in relation to measures that are brought forward by particular stakeholders. We are engaged in consultation with stakeholders in various taxation related issues in a way that we have not been in the past. We intend to continue that process. As a direct result of that process, it necessarily means that we will have amendments to move from time to time.

The member for Hunter spoke about ‘the government’s repeated failure to provide technical information and costings to support proposed changes to tax law’, and I respond as follows. Prior to the bill being introduced into this place, my office, together with the Department of the Treasury, provided a briefing to the member for Hunter’s staff to assist the member to be across the technical detail in the bill. I would also note that the Department of the Treasury took questions on notice as part of the Senate committee hearings. Responses to the questions have now been provided and are attached. It took us some time to formulate the answers to the questions given the technical nature of the questions. The Senate committee granted an extension of time for these answers to be provided. I note that these answers were provided before the Senate committee released its report. The measures in this bill clearly make improvements to Australia’s taxation laws. For this reason and the reasons outlined above, I commend the bill to the House.

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