David Johnston (WA, Liberal Party, Minister for Justice and Customs) Share this | Hansard source

I want to thank Senator Stephens and Senator Murray for their hard work on this piece of legislation and for their contributions in the Senate today. These two measures involve a number of alterations to the tax legislation, none of which are opposed, so on that basis I will take the opportunity to be brief.

Firstly, the Tax Laws Amendment (2006 Measures No. 7) Bill 2006 amends the capital gains tax legislation so that small business concessions are increased, to make them available to more small businesses and to reduce compliance costs. I foreshadow, as has been acknowledged by senators, that the government will be moving amendments such that schedule 2 will be removed from the bill. Whilst the interest withholding tax measure has been developed in close consultation with industry stakeholders and that consultation has gone on for a long time, further issues have been brought to the government’s attention following the introduction of the bill to parliament. The government would like more time to more fully consider those issues before implementing this measure.

The bill also gives effect to the government’s budget announcement that it will enhance philanthropy in Australia by streamlining the integrity rules and reducing the compliance costs applying to deductible gift recipients, or DGRs. Additionally, the bill amends the list of deductible gift recipients in the Income Tax Assessment Act 1997 by extending the time period for which four particular entities can receive tax deductible donations. Extending their deductible gift recipient status will assist those organisations to continue to attract public support for their very worthwhile activities, as mentioned by Senator Murray.

With the drought affecting farmers and their families across Australia, the last thing they need is a change in the tax treatment of their valuable farm equipment. That is why the government has implemented a statutory cap which will mean no change to the income tax treatment of harvesters and tractors. The bill also amends the Farm Management Deposits scheme to increase the non primary production income threshold from $50,000 to $65,000 and the total deposit limit from $300,000 to $400,000. Increasing these thresholds will assist primary producers to cope in this time of hardship.

The bill also provides certainty in the tax treatment of capital protected borrowings. Under a typical capital protected product, the investor is protected from a fall in the price of the shares as the loan facility includes a capital protection feature that gives the investor the right to transfer the shares back to the lender for the amount outstanding on the loan. These amendments will ensure that part of the expense on a capital protected product is attributed to the cost of the capital protection feature and that it is not interest and is not deductible where the cost is capital in nature.

I turn to the second of the bills, the Tax Laws Amendment (2007 Measures No. 1) Bill 2007. As set out by senators, schedule 1 of this bill amends taxation secrecy laws to assist in the coordinated enforcement of Australia’s laws by Project Wickenby and future similar task forces. These amendments preserve the general protection of taxpayer privacy. They speak for themselves. Obviously, the very worthwhile and important work of the ACC and the Australian Taxation Office through Project Wickenby needs the assistance of these amendments.

Schedule 3 amends the tax law to extend the employee share scheme tax concessions to certain stapled securities. Currently it is difficult for employers with stapled securities on issues to provide their employees with access to the employee share scheme concessions. For obvious reasons, these amendments are welcomed by senators on all sides of the chamber. I commend the bills to the Senate.

Question agreed to.

Bills read a second time.