David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Hansard source

I would like to thank those members who have contributed to this debate. Schedule 1 of the Tax Laws Amendment (2012 Measures No. 1) Bill 2012 implements the government's 2011-12 budget measure to disallow deductions against government assistance payments. The measure reinstates the principle that stood prior to the High Court decision, in the Commissioner of Taxation v Anstis, that taxpayers should not be able to claim a deduction for expenses they incur in qualifying for government assistance income. Disallowing deductions against rebateable benefits recognises that these benefits are effectively tax free because of the operation of the beneficiary tax offset.

This measure is important as it restores equity in the tax system so that individuals with the same level of income pay the same amount of tax. The measure is also important as it provides certainty to taxpayers on the scope of eligible deductions. The government provides targeted and timely assistance to the students who need it the most through the transfer system. Measures this government has introduced include start-up scholarships for new students, relocation scholarships for students who need to live away from home to study and a reduction in the age of independence for youth allowance to 22 from 1 January 2012.

Schedule 2 amends the income tax law to clarify the tax treatment of certain assets owned by a complying superannuation entity, including shares, units in a trust and land. These changes remove the ability of complying superannuation entities to treat these assets as trading stock, which is consistent with the general industry practice of treating shares on capital account.

Schedule 3 provides an exemption for ex gratia payments made to certain New Zealand visa holders affected by the recent floods in New South Wales and Queensland. Exempting these payments from income tax maximises the amount of payments that individuals receive and is consistent with the tax exemption provided to the equivalent payments to Australians, which is the Australian government disaster recovery payment. It is also consistent with the exemption provided for ex gratia payments to certain New Zealanders affected by the 2010-11 floods and Cyclone Yasi.

Schedule 4 of this bill implements the government's 2011-12 Mid-Year Economic and Fiscal Outlook measure to phase out the dependent spouse tax offset for dependent spouses born on or after 1 July 1952. The dependent spouse tax offset needs to be reformed to allow for Australia's modern and growing economy. This reform is an important measure to reduce the disincentive for dependent spouses without children to undertake paid employment. Taxpayers with a dependent spouse aged 60 or over on 1 July 2012 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 forces or overseas civilian tax offsets are also not affected by this measure.

Schedule 5 rectifies some minor technical and machinery errors which have been identified in the taxation laws. The government periodically progresses miscellaneous amendments like these as part of its care and maintenance of the taxation laws. I commend the bill to the House.

Question agreed to.

Bill read a second time.

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