Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

In amongst all the fun of the fair that has gone on over the last week in regard to media law reform, there has been an issue related to tax and the tax treatment of native title. I can confess to being one who has been holding out on the government on this legislation, the Tax Laws Amendment (2012 Measures No. 6) Bill and the considerations around the simple principle of whether capital gains tax should apply to native title determinations. My reasons for holding out are concerns that this is not a bipartisan piece of legislation, which is, in my view, disappointing. My preference by far would be that this were a bipartisan exercise in this chamber.

I have spoken in good faith to several in the Liberal-National Party about why there are concerns in the ranks about this TLAB No. 6 and the native title issues related to tax. My understanding is that there are concerns about the intergenerational issues, based on submissions made by the Mining Council of Australia to a Senate committee—and opposing this legislation looks like the position that we are going to see. Again, in good faith, those concerns about how these intergenerational issues can be better captured and better resolved have been taken up with government. This will address any genuine concerns that a perceived or real capital gains windfall is not just spent by existing elders or traditional owners without any consideration of the intergenerational issues, working on building better and more resilient communities as a consequence of this capital gains tax relief in a native title determination.

I am pleased that there has been work from government on that front. At 2.58 pm this afternoon, a media release was issued from the Attorney-General; the Minister for Families, Community Services and Indigenous Affairs; and the Assistant Treasurer. They have agreed to put together a Treasury-led working group to examine the tax treatment of native title payments and how they can better benefit Indigenous communities now and into the future. The government has committed to ensure that native title payments provide real benefit to native title holders now and into the future. The working group will explore how to strengthen governance and promote sustainability in the management of native title payments. I am reliably advised that the working group will include native title and taxation experts and industry stakeholders and that a full range of options to help hold, manage and distribute native title benefits will be considered. Pleasingly, this will include the model that has had a bit of airtime publicly and deserves to have more—the Indigenous Community Development Corporation model, which is a product of significant work by the National Native Title Council, the Minerals Council of Australia and community leaders like Marcia Langton from the University of Melbourne, I think—forgive me if I have the wrong university! I am also reliably informed that the working group will report to government on options by 1 July 2013, so it does have a relatively skinny time line.

With these intergenerational issues resolved, I would once again go down that chain of logic and back to the Liberal-National Party to urge them to really consider their upcoming vote. The intergenerational issues, in good faith, are being resolved. Therefore, the greatest option of all, in all issues before this House relating to Aboriginal affairs, is that bipartisan position. I would really urge the Liberal-National Party to reflect on their position and would encourage them to, at the very least, not oppose—and preferably support—this legislation going through the House. There are implications if it does not go through. There will be capital gains implications for native title recipients. I do not think that is the intended consequence of the position of the opposition; I would hope it is not. I would also hope it is not their intention to play the front-of-the-pub politics of tax breaks and land breaks and all the games that can go with an election season.

I think we are in an interesting time in Aboriginal affairs and in this parliament's relationship with our first peoples. We have had some small wins along the way. At the start of every day we now acknowledge country. That is small but significant. We have a bipartisan position now on constitutional recognition, with a two-year sunset. I really hope, regardless of elections, that bipartisanship can hold on to work on an actual question to put to the people, with agreement on that preferably being reached prior to 14 September, rather than having it parked as an issue for one side or the other to try to command or control.

I also think there is some inspired work happening within government in relation to service delivery and capacity building that for some reason is not being talked about as much as it should—grants, programs and government working with community in a place-based approach to community building and capacity building. I think some of the FaHCSIA-led work is really important work within government, working in partnership with community—and government should be really proud of that work. Some of the practical work that is happening in a post-apology environment deserves more airtime.

I would also emphasise some of the other work coming through on native title. I acknowledge that the former Attorney-General is in the House. Without verballing him—well, maybe a little bit!—I will say that I know we have a shared interest in improving the efficiency of the native title court and some of those issues around reversal of the onus of proof, better known as the French amendments. One day, preferably soon, parliament can see efficiency in a native title court as efficiency in any other court and therefore place a status on that and work towards it with some consideration of ideas like the French amendments.

Robert McClelland (Barton, Australian Labor Party) Share this | Link to this | Hansard source

Hear, hear!

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I acknowledge that 'Hear, hear!' from the former Attorney-General. I was worried that I was verballing him or outing him in some form!

At a local level, the post-apology practical work that is happening is a very strong job strategy in our community. We are now engaged with the Arthur Beetson Foundation and Pathways to the Pilbara, placing a strong emphasis on jobs, not only in local Aboriginal communities but also for the benefit of all businesses and all communities locally. It is taking time, but it is proving to be a successful strategy. Many non-Indigenous businesses are now realising that it makes business sense to engage staff in cultural awareness, to employ Aboriginal staff and to really engage in new markets that in the past not have been engaged with.

As part of a parliament and a time which is post the apology but pre the referendum, I do think there is some good work which can be done now. I lament that many of these issues get put off to the promised land of a later date, with one leader or another referring to them as 'aspirational'. There are real things we can do now. One of those things we can do in about five minutes time. We can vote in support of some intergenerational work at a community level—capital gains exemptions for native title recipients—and therefore help the building of resilient communities amongst Aboriginal Australians right throughout our country.

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

Firstly, I would like to thank all those members who have contributed to this debate on the Tax Laws Amendment (2012 Measures No. 6) Bill 2012. In particular, I thank the member for Lyne for his contribution, especially his contribution on the matters contained in schedule 1. I also wish to extend my thanks to everyone involved in the committee inquiry into this bill, including all those stakeholders who made submissions.

Schedule 1 provides Indigenous communities with much-needed certainty and clarity about the tax implications for certain events involving native title benefits and rights. Currently, it is not clear what the tax implications are for certain events involving native title benefits and native title rights. In June 2012, on the 20th anniversary of the historic Mabo decision, the then Attorney-General and the Minister for Families, Community Services and Indigenous Affairs announced that the government would clarify the tax treatment of payments from a native title agreement. Through these amendments, the government seeks to provide certainty. This measure confirms that income tax is not payable on certain native title benefits and with respect to certain capital gains tax events involving native rights. The certainty provided by this measure will assist Indigenous communities when they are making native title agreements. The government is committed to ensuring sustainable outcomes from native title payments.

While this bill provides certainty about the tax treatment of native title payments, we do take very seriously the concern that this clarification may create the incentive for native title payments to be disbursed rather than used to benefit communities and help close the gap. That is why we will establish a Treasury-led working group made up of key native title and industry stakeholders, native title and taxation experts, and relevant government agencies to identify the best next steps to strengthen governance and sustainability in the management of native title payments. This will include a thorough investigation of the Indigenous community development corporation concept, which has been the product of significant work by the National Native Title Council, the MCA and leaders like Marcia Langton. This group will commence work immediately and will report to government on options by 1 July 2013.

Schedule 2 adds two entities to the list of deductible gift recipients listed by name in division 30 of the Income Tax Assessment Act 1997 and extends the time period for the listing by name of three other DGR entities. Taxpayers can claim an income tax deduction for gifts to organisations which are DGRs. DGR status will therefore assist these bodies in attracting public support. The two organisations to be added to the list are AE1 Incorporated and Teach for Australia. Australia for UNHCR, One Laptop Per Child Australia and the Yachad Accelerated Learning Project will have their specific listing as DGRs extended.

Schedule 3 amends the Income Tax Assessment Act 1997 to extend the immediate deductibility of exploration and prospecting expenditure to geothermal energy explorers. These amendments will encourage exploration for geothermal energy resources and ensure that geothermal energy is an important part of the renewable energy mix.

Schedule 4 amends schedule 2 of the Tax Laws Amendment (2011 Measures No.5) Act 2011 to extend the interim trust streaming rules for managed investment trusts until the commencement of the new tax system for managed investment trusts on 1 July 2014. These amendments ensure that the interim trust streaming arrangements for managed investment trusts, and other trusts treated in the same way as managed investment trusts, continue to operate as intended until the scheduled commencement of the new tax system permits.

Schedule 5 implements the government's 2012-13 budget measure to introduce a means test for the net medical expenses tax offset from 1 July 2012. Under the means test, for people with adjusted taxable income above the Medicare levy surcharge thresholds—$84,000 for singles or $168,000 for couples or families in 2012-13—the amount above which they can claim the net medical expenses tax offset will increase to $5,000, indexed annually by CPI thereafter. The rate of reimbursement will be reduced to 10 per cent for eligible out-of-pocket expenses incurred above the claim threshold. Those under the Medicare levy surcharge thresholds will continue to receive the current level of benefit. Means testing ensures the net medical expenses tax offset is appropriately targeted, helping to improve the long-term sustainability of the healthcare system while protecting low- and middle-income earners.

Schedule 6 amends the definition of limited recourse debt to introduce consistency in the treatment of taxpayers who are not fully at risk in relation to capital expenditure. The amendments will maintain the integrity of the tax system by preventing taxpayers from inappropriately avoiding the limited recourse debt tax provisions.

Schedule 7 amends the Fringe Benefits Tax Assessment Act 1986 to implement the 2012-13 Mid-Year Economic and Fiscal Outlook measure to remove the concessional treatment of in-house fringe benefits purchased through salary sacrificing. The current fringe benefits arrangements allow employees to receive concessional treatment for goods and services that an employer or an associate produces or sells in the ordinary course of its business.

The current arrangements mean that some employees are able to access goods and services out of pre-tax income because of the concessional treatment when other employees and the general public have to purchase the goods and services out of their after tax income. The government recognises that it is not appropriate for the tax system to subsidise the in-house benefits of employees accessing them through salary-sacrificing arrangements and this is why the government is amending the Fringe Benefits Tax Assessment Act 1986 to restore the concessional treatment of fringe benefits to its original policy intent. Employers will still be able to provide staff discounts and these will continue to receive the concessional treatments so long as the employee purchases the goods and services out of their after tax income.

The amendments in schedule 7 mean that the concessional tax treatment is available for employers to reflect the true cost of providing the benefits and to minimise compliance costs rather than as a means of employees reducing their income tax. The amendments in schedule 7 apply from the 22 October 2012, the date of announcement, for all new arrangements and from 1 April 2014 for all existing arrangements.

Finally, schedule 8 addresses some minor deficiencies that have been discovered in the taxation laws and regulations. The government regularly addresses technical and machinery deficiencies through miscellaneous amendment schedules such as schedule 8 to this bill. Doing so gives effect to the government's commitment to maintaining the integrity of the taxation system. I commend the bill to the House.

Question agreed to.

Bill read a second time.