Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

The Tax Laws Amendment (2008 Measures No. 1) Bill 2008 makes a number of welcome improvements to Australia’s superannuation and tax laws. Firstly, the government committed, in the lead-up to the last election, to remove the tax deductibility for donations made to political parties, candidates and members—although not quite in the way that the member for Wentworth was just foreshadowing. We very clearly put our position upfront—it was made in the course of the campaign—and we indicated that what we were proposing would have a significant impact—(Quorum formed) No wonder the opposition would want to interrupt this debate when we are talking about limiting the tax deductibility on campaign donations. As I indicated, we did take this position to the last election. This measure is about transparency and will have a significant impact on national revenues.

Prior to 2006, the deduction limit was $100. The previous government—the Howard government—increased that threshold to $1,500, expanding the deduction to donations to independent candidates and members and donations made by businesses. These measures also ensure that business taxpayers cannot now claim a general deduction for contributions and gifts to political parties, members and candidates. This ensures that there are no loopholes for business to access a deduction for political donations.

The previous government’s policy cost Australian taxpayers effectively $10 million per annum and removing that loophole is an overall efficiency gain to the Commonwealth. I would have thought anyone in this House would have seen that as a responsible course of action to take—anyone who was not out there overtly trying to protect the interests of businesses in their private donations to political parties, which we are not. Therefore I commend that provision of this bill to the House.

Secondly, this bill ensures that superannuation lump sums will be tax free where they are paid to persons diagnosed with a terminal medical condition. Under the existing super lump sum tax provisions, for example, a lump sum paid from a taxed fund to a person below age 55 is taxed at a maximum rate of 21.5 per cent, which includes the Medicare levy.

You may recall, Mr Deputy Speaker, that back in 2007 there was some media coverage of a particularly sad case concerning Ms Christina Finnimore. Ms Finnimore was diagnosed at the age of 43 with terminal breast cancer. She wanted to be able to access her superannuation and put in place various arrangements. Under the tax system presently, that is not possible without incurring a 21.5 per cent tax on the lump sum that is paid out. This provision was noted in the parliament last year. The Howard government did announce in September of last year that it would amend the tax laws to give effective relief on lump-sum payments out of superannuation where people have been diagnosed as being terminally ill and that that would be retrospective to September last year.

I have no doubt that these changes, which I am sure are going to be agreed to by the other side, will have a significant impact and benefit for people who are diagnosed as being terminally ill and, more importantly, their families; how a person is going to set about in those tragic circumstances putting in place proper arrangements for themselves and for their families. At a minimum, it is an exercise in ensuring that as far as possible we can relieve the financial stress for people in that very tragic situation. What constitutes a terminal medical condition will, as I understand it, be left to be provided in the regulations that will follow the passing of this bill.

These amendments, as opposed to being backdated to the date that the former government had indicated when they made the announcement, to September last year, under this bill will apply retrospectively to payments made on or after 1 July 2007. This is certainly going to be one of those provisions that will occur from time to time when we make tax relief for people in the most devastating of situations. I am sure it will make a significant difference for families and people caring for a person who is terminally ill. I also commend that part of the bill.

Thirdly, this bill deals with the Equine Workers Hardship Wage Supplement Payment and eligibility for a beneficial tax offset. You will recall, Mr Deputy Speaker, that the outbreak of equine flu caused enormous disruption in the horseracing industry and in those activities directly related to horseracing. In my former life I had the honour of representing strappers, stablehands and trackwork riders and I know these occupations are generally occupied by young people and they are also generally low-paid jobs. Unfortunately, the equine flu meant that many of the activities of horseracing stopped or slowed down so considerably that trainers and horse owners had to put staff off. The staff who were ordinarily being put off were those trackwork riders, stablehands and the like. It also applied to people who ran organisations associated with horse transport and their workers. This provision seeks to give some relief to workers and businesses in the horseracing industry who have suffered financially as a result of the equine influenza outbreak. Those individuals who have lost jobs or most of their income, and particularly those who are sole traders, whose income has effectively ceased, will pay no tax on their payment if the only income received by the recipient is the Newstart payment.

The final three schedules of this bill were introduced by the former government in the Tax Laws Amendment (2007 Measures No. 6) Bill 2007, which lapsed when the election was called. The first of these three deals with carbon sink forests. It will be an important contribution to the establishment of carbon sequestration and the delivery of natural resource management benefits by encouraging the establishment of carbon sink forests. The establishment costs of these carbon sink forests will be immediately deductable in the income years from 2007-08 through to 2011-12 inclusive. After that period, establishment costs will be deductable over 14 years and 105 days at the rate of seven per cent per annum. To be eligible to claim these deductions, taxpayers must be carrying on a business and the carbon sink forest must meet the environmental and natural resource management guidelines. As I said, this is something that was put forward by the last government. It is something that I think is very important. In terms of afforestation and our environmental needs, carbon sink forests play a very significant role.

Unfortunately, the former government refused to take a very practical step in the environmental fight. I point out that it took the election of the Rudd Labor government for the Kyoto protocol to be signed. Having done so, we will use a number of weapons to address environmental degradation, and one of those will be the provision of carbon sink forests. It is just regrettable that, whilst the former government was prepared to go with that proposition last year, in the whole 11 years of its government it could not see itself as having a place at the table on something that was going to be of a much higher order than that in looking at our world responsibilities, which flow from being a signatory to Kyoto.

There are a number of other provisions of this bill which deal with pieces of legislation that were proposed by the former government but did not make it into the parliament, having regard to the fact that the election had been called. I support the bill in its totality. I oppose the proposition advanced by the member for Wentworth about further relief to be given to supporters of the Liberal Party. It will not occur in this bill. This is a responsible piece of legislation and one which will have great benefits for taxation and, in particular, for superannuation recipients who have been diagnosed as being terminally ill.

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