Santo Santoro (Queensland, Liberal Party, Minister for Ageing) Share this | Hansard source

I table a revised explanatory memorandum relating to the Tax Laws Amendment (2006 Measures No. 4) Bill 2006 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

DEFENCE FORCE (HOME LOANS ASSISTANCE) AMENDMENT BILL 2006

This bill seeks to extend the operation of the Defence HomeOwner Scheme (the Scheme), which is governed by the Defence Force (Home Loans Assistance) Act 1990, from 31 December 2006 to 31 December 2007.

The Scheme provides members of the ADF with a subsidy on the interest expense incurred on a home loan. The subsidy is payable on a maximum home loan value of $80,000. The assistance is tied to home loans available through the National Australia Bank.

The Act specifies a finishing date of 31 December 2006. After this date, no new entitlement certificates confirming the eligibility of ADF members to the subsidy can be issued.

The Government has obtained the agreement of the National Australia Bank for the Bank to continue the current arrangement until 31 December 2007.

The Scheme was implemented at a time when the banks were the major home loan providers and restricts the ability of ADF members to use the subsidy assistance to access the vastly different range of home loan products available in the contemporary home loan market.

A review is now being undertaken by the Department of Defence to establish a home ownership assistance scheme that is more contemporary to meet the needs of both Defence and ADF members. This review is to be completed in time to allow the implementation of a new scheme by 31 December 2007.

To ensure that eligible ADF members continue to have access to home ownership assistance under the current Scheme, pending the outcome of the review, it is necessary to amend the finishing date currently prescribed in the Act from 31 December 2006 to 31 December 2007. This amendment will also retain the sole loan provider rights of the National Australia Bank.

TAX LAWS AMENDMENT (2006 MEASURES No. 4) BILL 2006

This bill amends various taxation laws to implement a range of changes and improvements to Australia’s taxation system.

Schedule 1 to this bill extends the existing capital gains tax (CGT) roll-over relief on marriage breakdown to assets transferred under a binding financial agreement or an arbitral award entered into under the Family Law Act 1975. This measure will also extend to similar arrangements under state, territory or foreign legislation. Finally, the measure will ensure that the CGT roll-over interacts appropriately with the main residence exemption, and that marriage breakdown settlements do not give rise to CGT liabilities.

Schedule 2 improves the interaction between the consolidation rules and the demerger rules. Currently a consolidation integrity measure causes certain CGT roll-overs to be ignored for consolidation tax cost setting purposes. This integrity measure will not apply to a consolidated group or multiple entry consolidated group that forms after a demerger. The amendments will apply from 1 July 2002 (that is, from the commencement date of the consolidation regime).

Schedule 3 amends the simplified imputation system to ensure that Australian companies receive franking credits attached to non-assessable non-exempt distributions from New Zealand companies. This change will apply from 1 April 2003 (that is, from the commencement of the trans-Tasman imputation measures).

Finally Schedule 4 to this bill will implement the Government’s decision to reform the CGT treatment of foreign residents.

These reforms will further enhance Australia’s status as an attractive place for business and investment by addressing the deterrent effect for foreign investors of Australia’s current broad foreign resident CGT tax base.

The amendments in this bill better target and strengthen the application of CGT to foreign residents. This is achieved firstly by narrowing the range of assets on which a foreign resident is subject to Australian CGT to Australian real property, and the business assets of Australian branches of a foreign resident.

Secondly, the integrity of this narrower CGT tax base for foreign residents is strengthened. CGT will apply to non-portfolio interests (10 per cent or more) in Australian and foreign interposed entities, where more than half of the value of the interposed entities’ assets is attributable to Australian real property. Those assets may be held directly, or held indirectly through one or more other interposed entities.

The amendments align Australia’s domestic law with the approach adopted in Australia’s tax treaties. They complement taxation changes already introduced by the Government affecting investments made from Australia.

Full details of the measures in the bill are contained in the Explanatory Memorandum.

Debate (on motion by Senator Santoro) adjourned.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.