Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

in reply—I thank the members who have contributed to the debate on the Tax Laws Amendment (2008 Measures No. 6) Bill 2008. Schedule 1 of this bill modifies the capital gains tax provisions of the Income Tax Assessment Act 1997 for corporate restructures. Companies will be prevented from obtaining a market value cost base for shares and certain other interests acquired in another entity following their scrip for scrip capital gains tax rollover under an arrangement that is taken to be a restructure. An arrangement will be taken to be a restructure if, broadly, the market value of the shares and certain other interests issued by the acquiring entity under the arrangement in exchange for similar interests in the original entity is more than 80 per cent of the market value of all the shares in other interests issued by the acquiring entity. If an arrangement is taken to be a restructure then the cost base for the shares and other interests that the acquiring entity acquires in the original entity will reflect the tax costs of the underlying net assets of the original entity rather than its market value.

This is an important integrity measure, which the former government announced its intention to deal with in October 2007. However, the former government’s proposal was poorly targeted and effectively stopped scrip for scrip arrangements, causing disruptions in the market. The government’s measure has been refined through very extensive consultation and will effectively target the mischief. The amendments will apply to arrangements entered into after 7.30 pm Australian Eastern Standard Time on 13 May 2008 and will prevent companies from gaining significant unintended tax benefits by restructuring. I commend the bill to the House, this schedule and the other schedules noted therewith.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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