Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

The opposition supports the Tax Laws Amendment (2008 Measures No. 6) Bill 2008, which contains four schedules. I will, in summary, go through each of those schedules and address some of the detail in each of them. Schedule 1 of the bill amends the Income Tax Assessment Act 1997 to prevent a market value cost base being used when interests in an entity are acquired by another entity through a scrip for scrip capital gains tax rollover that is a restructure. Schedule 2 amends the Tax Administration Act 1953 to correct the legal and administrative barriers relating to debts that are removed from the foreign claims register. It also provides for certain types of payments to be made by the Commissioner of Taxation to other countries. Schedule 3 amends the Superannuation Guarantee (Administration) Act 1992, with the objective of expanding the time period in which an employer can make a late superannuation contribution and still elect to use the late payment offset to reduce their superannuation guarantee charge obligation. Schedule 4 is, in layman’s terms, a series of housekeeping measures that correct errors and anomalies within a number of tax laws to ensure their proper operation and original intention.

There has been a longstanding policy debate on schedule 1, which deals with the scrip for scrip CGT rollover. It was pursued in great detail by the former coalition government. In fact, we had made a number of announcements on that. The former coalition government recognised that certain entities were undertaking a scrip for scrip CGT rollover and obtaining a market value cost base for the shares in the acquired entity. The entities would then be able to use the consolidation tax cost setting rules to push the market value cost base into the underlying assets of the acquired entity. In a sense this mischief allowed entities to reduce the capital gains tax. What was able to happen was that, in tax terms, a mischief was allowed to occur where the tax assets were able to be sold and increases in the capital allowance deductions were able to occur beyond what had been originally intended. So in October 2007 the previous coalition government publicly announced it would introduce measures to prevent the intentional tax mischief, for want of a better term, relating to the resetting of tax values relating to scrip for scrip capital gains tax rollovers. The former government also announced a commitment to undertake consultation with the business community to ensure that the legislation, which of course is quite technical in this area, was framed properly and would operate well and with the correct intention. The announcement reflected a longstanding commitment to the integrity and correct operation of the tax system, and this side of the House welcomes the fact that the government agrees with that and has taken up the consultation and is introducing measures in this tax law amendment bill.

The schedule prevents entities from exploiting the scrip for scrip CGT rollover provisions to minimise their tax liability. Where a scrip for scrip rollover is taken to be a restructure, entities will not be able to apply a market value cost base. The schedule will prevent entities undertaking scrip for scrip CGT rollover restructures with the intent of reducing their capital gains tax liability from the disposal of the acquired entity’s assets. This is consistent with the intent of capital gains tax to apply to increases in the value of capital assets.

Schedule 2 addresses the legal and administrative issues arising from deeming debts being removed from the foreign claims register. The schedule also expands the types of payments the Commissioner of Taxation can make to other countries. It expands the types of payments from principal and general interest charge to allow the commissioner to pay other amounts that may need to be paid.

Schedule 3 amends the time within which an employer can make a contribution to an employee’s superannuation fund and be able to use that payment to offset the superannuation guarantee liability. This schedule will encourage employers to be timely in making superannuation contribution payments. Schedule 4, the final schedule in the tabled bill, will make a whole series of what can be described as housekeeping changes, corrections of anomalies, to ensure that confusion is cleared up and unintended mistakes are dealt with and that the law operates as was originally intended. This is a feature of all tax law amendment bills. It is through these bills that this sort of ongoing housekeeping work can be done.

I am aware that there will be a fifth schedule through an amendment that the Assistant Treasurer will move. I have been consulted on the substance of that and the Assistant Treasurer made a public announcement last night. In essence, as he will outline in the summing up of this debate, those amendments will clarify and ensure that donations for the Victorian bushfires in all the forms that they are being made do not attract tax, which is very sensible. From time to time the rules relating to tax deductibility mean that there have to be flexibility and announcements by governments of all persuasions in this regard. It is quite obviously fitting that he has made that announcement so that there is no uncertainty whatsoever. It is appropriate, given that this tax law amendment bill is before us this day, that at the earliest opportunity he moves the required amendment to be able to achieve that in a legislative sense. I know that will of course also have the unanimous support of the House.

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