Sussan Ley (Farrer, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

I am pleased to make some brief remarks on the Tax Laws Amendment (2010 Measures No. 1) Bill 2010. My colleague the member for Cowper has covered the first schedule well. It deals with his area of operations, superannuation. I would like to make some comments on schedules 2 to 6.

Schedule 2 implements the announcement by the Assistant Treasurer on 21 October 2009 that the government would amend the law to protect the deductions of investors in forestry managed investment schemes where the scheme collapses before the four-year rule is satisfied. The four-year rule requires investors in forestry managed investment schemes to maintain their investment in a scheme for four years. Currently, if a taxpayers’ interest in a scheme is not held for four years, the investor cannot claim a deduction. The amendments in this schedule allow investors to claim deductions if the four-year rule is not satisfied because of factors outside the investor’s control. This is an important measure, because there are factors that have been occurring outside of the investor’s control. Principally, we have seen in recent years the insolvency of several MISs, and the effect that has had on investors has been in some cases quite devastating. According to their current interpretation of the law, the tax office have not had the ability to allow the deduction, even though the facts around the ending of the MIS have been quite clear and clearly beyond the control of the investor. The law does not, as it currently stands, allow that scope.

Situations that could be genuinely outside the initial investor’s control that are noted in the explanatory memorandum include the accidental death of the initial investor, the interest in the scheme being compulsorily transferred because of marriage breakdown or compulsory acquisition by a government, the initial investor becoming insolvent, the interest in the scheme being cancelled because of trees being destroyed by fire, flood or drought, and the insolvency of the manager of the scheme leading to the winding up of the scheme. Those are some examples. The amendments in this schedule do have a retrospective application from 1 July 2007 and will provide some welcome relief to those particularly who were caught up in the ending of many MISs over the last two years due to the firms going into liquidation.

Schedule 3 amends the tax law to give effect to a measure announced in the 2009-10 budget. In the last budget the government announced that they would amend the law to allow managed investment trusts to make an irrevocable election to apply capital gains tax on the disposal of certain assets such as shares and real property. Through our ongoing consultations with businesses and tax agents, I know that the amendments in schedule 3 will provide certainty to investors. The amendments will have effect from the 2008-09 income year.

Schedule 4 introduces an income test for those seeking to access the entrepreneurs’ tax offset. The introduction of an income test was first announced by the government in the 2008-09 budget and later deferred until the 2009-10 budget. The entrepreneurs’ tax offset was introduced by the former coalition government and took effect from 1 July 2005. It was intended to provide an incentive for very small businesses in the early stages of business development. The entrepreneurs’ tax offset provides a maximum tax offset of 25 per cent of their income tax liability that is attributable to their small business. The amendments in schedule 4 introduce an income threshold of $70,000 for singles and $120,000 for families to take effect from 1 July 2009.

Schedule 5 amends the tax law relating to the consolidation regime. The consolidation regime has undergone continuous improvement since it began in 2002. In 2007 the then Assistant Treasurer, the member for Dickson, announced that the then government would amend the law relating to the consolidation regime to clarify certain unclear provisions and to improve the consolidation regime’s interaction with other areas of the tax law. The then government began to undertake extensive consultation with industry stakeholders on the amendments. Schedule 5 contains the amendments to the consolidation regime initiated by the former coalition government.

Schedule 6 contains housekeeping amendments, as is common in many of these tax law amendment bills. It makes a number of minor changes to the existing tax law to ensure they operate as was intended. The bill was introduced into this place on 10 February 2010 and contains various technical aspects amending tax law. As such, I commend the bill to the House.

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