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.