Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

I thank those members who have contributed to this debate. In particular I acknowledge the contribution of the member for Greenway, who has been influential in a lot of the thinking on these matters. I also acknowledge the work of the opposition, who would appear on this matter to be constructively working with the government and I will refer a little bit more to this in some of the schedules.

Schedule 1 allows trust beneficiaries to continue to use primary production averaging and farm management deposit provisions in a year where the trust has a loss for trust law purposes. The Gillard government has broadly restored in this bill the position that existed before the High Court decision in Commissioner of Taxation and Bamford. That decision necessitated the Commissioner withdrawing a public ruling that in certain circumstances a beneficiary could be eligible for the primary production averaging and farm management deposit rules in a trust loss year. This schedule secures continuity for taxpayers because the amendments apply from the 2010-11 income year and the Commissioner's ruling applies up to and including the 2009-10 income year.

As I said earlier, I acknowledge that there have been productive discussions with the opposition about identifying an agreed further reform to this area, and I concur with the remarks of the member for Casey on this matter. The amendments in schedule 2 ensure that where permitted by the trustee the capital gains and franked distributions, including any attached franking credits of a trust, can be effectively streamed to the beneficiaries for tax purposes by making them specifically entitled to those amounts. The amendments also introduce specific anti-avoidance rules to address the potential opportunities for tax manipulation that can result from the inappropriate use of exempt entities as beneficiaries. These amendments will provide more certainty for the trustees and beneficiaries of trusts that stream capital gains and franked distributions, including any attached franking credits, while the government continues to progress its broader review of the taxation of trust income.

Schedule 3 amends the provisions in the taxation law related to the National Rental Affordability Scheme tax offset provisions. The amendments simplify the operations of the NRAS—the National Rental Affordability Scheme—for participants by introducing the concept of an NRAS consortium, which allows a broader range of arrangements to participate in the NRAS. The amendments provide some additional flexibility to the NRAS participants and how the incentive is shared between members of the NRAS consortium. These amendments do this by establishing an election to allow approved participants to relinquish their entitlement to an NRAS tax offset in favour of other members of the NRAS consortium. These amendments also address some minor technical issues that have arisen from the interaction of the tax law and the National Rental Affordability Scheme Act 2008. They also ensure that certain payments provided under the NRAS indirectly, such as through an NRAS consortium, are treated as non-assessable, non-exempt income.

Schedule 4 implements the government's budget measure to phase out the dependent spouse tax offset for dependent spouses currently aged less than 40 or, in other words, people who were born from July 1971 onwards. The dependent spouse tax offset originates in the initial Income Tax Assessment Act 1936 and it needs to be reformed to allow for Australia's modern and growing economy. This reform is an important measure to help encourage more Australians into paid employment by removing the disincentive for younger dependent spouses without children to remain out of the workforce. Dependent spouses aged 40 or over will not be affected by this measure, nor will dependent spouses with children or taxpayers whose dependent spouse is a carer, an invalid or permanently unable to work. Taxpayers eligible for the zone, overseas force or overseas civilian tax offsets are also not affected by this measure.

Schedule 5 amends the tax laws to reform the current statutory formula method for determining the taxable value of car fringe benefits. The changes will replace the current statutory rates with a single statutory rate of 20 per cent, regardless of kilometres travelled. Under the current statutory formula method, the calculated fringe benefit from a salary-sacrificed car decreases as the distance travelled by the vehicle increases. People can therefore increase their tax concession by driving their vehicle further. This schedule removes the current incentive for people to drive salary sacrificed and employer provided vehicles further to increase their tax concession and, in the process, burn more fuel. The reform implements yet again another recom­mendation of Australia's Future Tax System Review, also known as the Henry review, and will apply the commitments made after the budget announcement of 10 May 2011. It will be phased in over four years. This bill deserves the support of the parliament. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Administrator recommending appropriation announced.

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