Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Hansard source

I would like to thank all the members who have taken part in the debate on the Tax Laws Amendment (2007 Measures No. 4) Bill 2007 and the associated imposition bills, the Taxation (Trustee Beneficiary Non-disclosure Tax) Bill (No. 1) 2007 and the Taxation (Trustee Beneficiary Non-disclosure Tax) Bill (No. 2) 2007.

The measures proposed by the Taxation Laws Amendment (2007 Measures No. 4) Bill 2007 are contained within eight schedules. Schedule 1 gives effect to the government’s announcement in the 2005-06 budget that it would abolish foreign loss and foreign tax credit quarantining and streamline the remaining foreign tax credit rules. This is achieved by repealing the existing arrangements and replacing them with new, simplified foreign income tax offset rules. These amendments also include transitional rules for the treatment of existing foreign losses and credits. By reducing tax complexity and compliance costs, these changes will assist businesses of all sizes operating, or seeking to grow, internationally. They build on the previous reforms undertaken by the review of international taxation arrangements to ensure Australia has a competitive international tax system.

Schedule 2 to this bill will ensure that capital gains tax need not be an impediment to mergers or takeovers of medical defence organisations that are also companies limited by guarantee. This schedule provides a capital gains tax rollover, similar to the scrip-for-scrip rollover, for membership interests in companies limited by guarantee that are also medical defence organisations. Schedule 3 will allow superannuation funds to continue to invest in instalment warrants, consistent with longstanding practice. Such warrants must be of a limited recourse nature and can be held over any asset a fund would be permitted to invest in directly.

Schedule 4 to this bill introduces simplified trustee beneficiary reporting rules that will reduce compliance costs for trustees of closely held trusts whilst maintaining the integrity of the tax system applying to trusts. Under the new rules, trustees of closely held trusts will be required to report only the details of trustee beneficiaries that are presently entitled to income of the trust and tax-preferred amounts, rather than trace through amounts to ultimate beneficiaries. Furthermore, family trusts will be excluded from the new reporting requirements and the commissioner will be given a determination-making power not to require annual reporting for some trusts where he considers it unnecessary. The new arrangements demonstrate the government’s commitment to reducing red tape and regulatory burdens whilst maintaining the integrity of the tax system.

Schedule 5 will assist in the smooth transition to the simplified superannuation regime, known as Better Super, and ensure the intended policy outcomes are reflected in the legislation. Schedule 6 amends the list of deductible gift recipients in the Income Tax Assessment Act 1997. Deductible gift recipient status will assist the listed organisations to attract public support for their activities. Schedule 7 implements various technical amendments and also some general improvements to the law of a minor nature. These amendments are an important part of the government’s commitment to improving the quality of the taxation laws and, again, reducing their complexity.

Finally, schedule 8 amends the trust loss rules which apply to family trusts. The amendments allow family trust elections to be varied or revoked in a broader range of circumstances. The amendments also expand the definition of ‘family’ to include lineal descendants. Furthermore, distributions to former spouses, widows or widowers and former stepchildren will be exempt from family trust distribution tax.

The amendments in this bill are part of the government’s ongoing commitment to improving the quality of the tax laws and reducing compliance costs for taxpayers. I again thank those members who have participated in the debate and I commend the bills to the House.

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