Andrew Murray (WA, Australian Democrats) Share this | Hansard source

The purpose of the Tax Laws Amendment (2006 Measures No. 2) Bill 2006 is to implement a number of disparate legislative taxation measures to achieve a range of government policy outcomes. The bill is arranged into seven unrelated schedules with key amendments pertaining to the Income Tax Assessment Act 1997, the Income Tax (Transitional Provisions) Act 1997 and the Superannuation Guarantee (Administration) Act 1992. A number of minor technical amendments are also proposed which address a large number of other acts.

Schedule 1 seeks the passage of the government’s ex gratia lump sum payment to maintenance workers involved in the F111 deseal-reseal program. The bill ensures that lump sum payments to Defence Force maintenance workers exposed to chemicals whilst working on F111 fuel tanks are exempt from taxation. This might not otherwise be the case without a specific legislative directive. The payments are valued at either $10,000 or $40,000, depending on the circumstances of each affected employee. According to the government, the payment recognises the difficulties eligible personnel suffered, regardless of whether there are any adverse health impacts.

Schedule 2 adds a further two specific gift recipients to the deductible gift recipient list of the Income Tax Assessment Act 1997. The two additional recipients include Playgroup Victoria Inc. from 24 February 2006 and the St Michaels Church Restoration Fund from 24 February 2006.

Schedule 3 clarifies the capital gains tax treatment of options. This amendment is necessary as there were a number of unintended legislative consequences arising from the rewrite of the capital gains tax provisions of the Income Tax Assessment Act 1997 as part of the Tax Law Improvement Project. That is, incidentally, a reminder that these acts are so complicated that, even when the experts draft the changes, some years later problems and difficulties can be discovered. The measures in schedule 3 essentially reinstate the position in the Income Tax Assessment Act 1936 in relation to options exercised on or after 27 May 2005, the date of the announcement of this amendment.

Schedule 4 amends the tax laws pertaining to compulsory acquisition. Specifically, the bill seeks to amend subdivision 12B of the Income Tax Assessment Act 1997 to extend the circumstances in which a taxpayer may choose to obtain a CGT rollover when an asset is compulsorily acquired. Corresponding changes are made for balancing adjustment offsets under the uniform capital allowance provisions. Notably, the financial impact of schedule 4 is uncertain but is estimated to be at a cost to revenue of approximately $5 million over the forward estimates period.

Schedule 5 amends the Income Tax Assessment Act 1997 to limit the circumstances in which the franking deficit tax offset is reduced. This measure has retrospective effect as of 1 July 2002, the start of the simplified imputation system.

Schedule 6 extends the super choice legislation provisions to employees currently governed under state law that conflicts with enabling employees to choose their own superannuation fund. The schedule amends the Superannuation Guarantee (Administration) Act 1992 by ensuring that employers that are constitutional corporations and who make super guarantee contributions to a fund nominated in a state law do not have to make these contributions to that fund if an employee chooses an alternative fund.

Schedule 7 is the final schedule in this bill and aims to address a number of technical corrections and improvements to taxation legislation. These corrections should improve the useability of the taxation laws in a minor way by fixing errors such as duplications of definitions, missing asterisks from defined terms and incorrect numbering and referencing.

What is the price that can be placed on an individual’s quality of life? As repulsive as this question may be, it forms the basis of schedule 1 of this bill. According to the government, a one-off ex gratia payment of either $10,000 or $40,000 is a fair price to pay. I think that the government is getting a bargain, and I am not alone. According to F111 Deseal/Reseal Support Group president Ian Fraser, ‘Forty thousand dollars for a ruined life is simply not enough.’ Clearly there is no price that can be placed on one’s health and wellbeing. Whilst I appreciate, to an extent, the government’s attempt to address the harm caused to a number of Department of Defence employees in the course of their duty, I must also condemn their corporate style ‘admit no liability’ approach to this matter. Advice from the F111 Deseal/Reseal Support Group indicates that the amounts in question are insufficient to help people battling illnesses due to chemical exposure.

Undoubtedly, Australian government employees deserve better. They deserve more than a one-off payment that, according to the government, is being made regardless of whether there is evidence of an adverse health impact. If there were not an adverse health impact, it is a generous gift. If there is an adverse health impact, the amount is probably far too low. Otherwise stated, the payment does not in any way imply negligence or fault on the part of the government.

Surely Defence personnel who are government employees and are exposed to chemicals that may lead to adverse health effects should receive the best long-term care and support the government can afford. With examples of maltreatment such as this, it comes as no surprise that the Defence Force is battling to achieve its recruitment targets. Its reputation is atrocious on matters like this. If you return dead or injured or if you are injured in the normal course of your work, such as in these cases, the general sense in the community is that you are going to be undercompensated or ‘under cared for’. That is not a good way to encourage recruitment. Whilst I will always support cases that will alleviate some degree of harm caused, the government is capable of far better and the employees in question deserve far better.

Turning to schedule 4: this is a highly technical revision to the timing of balancing adjustment offsets for the uniform capital allowances provisions for compulsory acquisitions. The change enables the deferment of recognising capital gains and is beneficial to affected taxpayers. This is an equitable change, since compulsory acquisitions largely remove control from asset owners, who therefore cannot control the timing and impact of their capital gains tax event.

Schedule 5 is the schedule which affects the franking deficit tax offset. It reduces the number of instances where companies are penalised by way of a reduction in the size of the tax offset they can claim for franking deficit tax to ensure that it only applies in income years where a company has made, directly or indirectly, a franked distribution. This change is in line with the intention behind the reduction in tax offset for excessive franking deficits for companies and ensures that companies that book an excessive franking deficit balance due to the imposition of a penalty or through circumstances outside of the companies’ control are not penalised. While these changes may be seen as a concession to poorly managed companies, they do better restate the intention behind the underlying law and as such should be supported.

The Democrats were key negotiators with the government for the outcomes of the superannuation choice legislation that came into effect last year. This is the topic for schedule 6 of this bill, which extends the choice of superannuation plan option to several groups of employees who, until now, have faced legislative uncertainty over whether they are able to access the benefits of the new federal laws.

Whilst choice of super fund laws have already been enacted, it has been recognised that a number of funds are potentially exempted from these provisions due to monopolistic protections under state law. This includes employees whose superannuation is governed under the following legislation: the New South Wales Coal and Oil Shale Mine Workers (Superannuation) Act 1941, the Queensland Coal and Oil Shale Mine Workers Superannuation Act 1989 and the Western Australian Coal Industry Superannuation Act 1989. The changes proposed in this bill amend the Superannuation Guarantee (Administration) Act 1992 to effectively override these state powers, and, whilst this may be viewed as yet another example of centralism by the government, they are consistent with the policies and decisions that we support and that were instrumental in establishing super choice. They ensure consistency and have the support of the Democrats. The Democrats support the bill as a whole.