Barnaby Joyce (New England, National Party, Minister for Agriculture) Share this | Hansard source

Let me begin by thanking members who have contributed to this debate, especially those from the other side; however, I do need to draw their attention to a couple of things that need to be corrected. In 2015-16 the government will provide around $9.7 billion in support of innovation, science and research. This amount includes approximately $3 billion for the Research and Development Tax Incentive and $1.8 billion for the Australian government research activities, including through the CSIRO. I note that, in my own portfolio year, through matched contributions about a quarter of a billion dollars a year goes into research and development.

The Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill 2015 is part of the government's plan to repair the budget, tackle the debt and get the budget back on track. This is vitally important for maintaining living standards into the future for our children and our grandchildren. We are committed to living within our means so that we can deliver prosperity into the future. This bill also implements a number of announced but unenacted measures that will help to provide taxation certainty to corporates, investors and superannuation funds.

Schedule 1 to this bill keeps our promise to the resource sector that the limiting of the immediate deductibility of certain exploration expenses would not impact farm-in farm-out arrangements or resource sector interest realignments. These arrangements will ensure that genuine exploration activities and other legitimate restructuring arrangements can continue, without any unintended tax consequences. This measure maintains the tax neutrality of a farm-in farm-out arrangement and provides tax rollover relief for an interest realignment in which the parties to a joint venture exchange interest in mining, quarrying or prospecting rights.

Schedule 2 to this bill will extend the    effective life of in-house software from four years to five years. From 1 July 2015 taxpayers will claim the tax deduction for the expenditure on in-house software over five years. While there is no change to eligibility for the deduction, the measure ensures that the effective life of software for tax purposes better reflects the typical useful life of software for businesses. This change will save $420 million over the four years to 2017-18. This money will be redirected towards funding other priorities and paying back the debt left by the previous government.

Schedule 3 to this bill provides certainty for investors in instalment warrants and instalment receipts by clarifying the income tax treatment of these trust arrangements. Instalment warrants and receipts allow an investor to purchase an asset such as a share by paying in one or more instalments. Currently, industry looks through the instalment warrant or receipt for capital gains tax purposes. Although this is a longstanding practice, some uncertainty has arisen about whether the tax law supports this practice. This measure ensures that the investor is treated as the owner of the underlying asset for income tax purposes. This benefits investors as capital gains tax will not be applicable at the time of paying the last instalment. Equally, the investor rather than the trustee will be assessed on any dividends or income received from holding or selling the assets. It also provides long overdue certainty for individuals, businesses and superannuation funds.

Schedule 4 to this bill clarifies the company loss deduction rules. Companies make a tax loss when the total deductions they claim are greater than their income    in a year. Companies are able to carry forward these losses to subtract from assessable income in future years. I feel like I am back at accountancy! To carry losses forward, companies must have either maintained the same ownership and control or carried on the same business since the loss was incurred. A number of tests are used to assess this. There are a couple of minor technical issues with these tests. These issues have been unsettled for some time. This measure fixes these technical issues and will ensure that the company loss rules operate as intended. Full details of each of these measures are contained in the explanatory memorandum.

In summing up, the measures in this bill are part of the government's plan to repair our finances and strengthen our country so that future generations can enjoy the same or a better standard of living than we do. In addition, the bill provides important certainty for taxpayers, supports mining exploration and reduces red tape. This bill makes further progress in reducing the number of unenacted taxation measures. I commend this bill to the House.

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