Sussan Ley (Farrer, Liberal Party, Minister for Health) Share this | Hansard source

I am delighted to sum up the Tax Laws Amendment (Norfolk Island CGT Exemption) Bill 2016 and I thank those members who have contributed to this debate. This bill amends various taxation laws to provide a full capital gains tax exemption on assets held by Norfolk Island residents to assist the Norfolk Island community in transitioning to Australia's mainstream taxation system. This exemption is part of a broader reform package which delivers on the government's election commitment to introduce taxation, social security and healthcare arrangements on Norfolk Island effective from 1 July 2016.

On 14 May 2015 the parliament passed the Norfolk Island Legislation Amendment Act 2015, ending decades of uncertainty for the residents of Norfolk Island. The Australian government will integrate Norfolk Island with mainland social security systems, including access to Medicare and the Pharmaceutical Benefits Scheme. Immigration, customs and quarantine services will also be included from 1 July 2016. Further consultation with the community raised concerns about the potential retrospective taxation of capital gains. Through this consultation it was also revealed that a historical lack of formal documentation for asset sales as well as cultural practices relating to inheritance assets are likely to inhibit the legislated application of CGT in some instances. In order to address these concerns, this bill will provide a full CGT exemption on assets held by Norfolk Island residents prior to 24 October 2015, the date the exemption was announced. The CGT exemption demonstrates the government's commitment to actively and regularly engage with the Norfolk Island community to ensure all residents have significant input into their future governance, including through the Norfolk Island Advisory Council.

The broader reform package addresses longstanding issues facing Norfolk Island, which were explored in a royal commission, numerous reports, 12 parliamentary inquiries and submissions over a 30-year period. The government is putting in place the necessary structural reforms to improve service delivery and boost economic growth while preserving the island's culture and local representation through concessions such as the CGT exemption in this bill. The exemption will apply to those assets that were exempt from CGT before Norfolk Island was fully brought within Australia's income tax system. Similarly to the treatment of assets when CGT was first introduced in Australia in 1985, these assets will continue to be exempt until a CGT event happens—for example, when the asset is sold or disposed of.

Again, I am pleased to present this summation of the bill on behalf of the minister. Can I say, as one of the members in this place who has visited Norfolk Island—it was in my capacity as shadow minister for justice and customs a very long time ago—you cannot visit the island and not to be charmed by its people, its history and its prospects for the future. There is much warmth for the people of Norfolk Island felt by the members of the Australian parliament today. I commend the bill to be House.

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