Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

I am sure it is, as all my contributions on tax legislation are. In continuing my contribution, I am sure that all those who are listening to this broadcast are well aware of my refreshing words on 10 May when I referred to the need to boost R&D in this country. My colleague Senator Carr, who, I have to say, is much more of an expert in R&D than I and who has some shadow ministerial responsibilities in this area, made a very effective contribution in his speech on the second reading. Labor notes that it has taken a long time to deal with the issue of the offset and premium deduction, which was introduced in 2001. There is 150 per cent tax deduction for eligible expenditure on R&D, which was introduced by the Labor government in May 1986. In 1996, the Liberal-National Party government, as part of its budget measures on R&D, decided to reduce the maximum concessional rate of deduction from 150 per cent to 125 per cent and to further tighten eligibility criteria.

The current government’s record on research and development is truly woeful. Rather than improving Australia’s ranking in expenditure on business research and development since 1996, Australia has slipped from third to ninth in the OECD—the organisation of developed countries—in terms of government expenditure on R&D as a percentage of gross domestic product. We have also slipped from 13th to 15th in terms of gross expenditure on R&D as a percentage of GDP. This is a fundamental factor in improving productivity, which in turn is a fundamental factor in sustaining economic growth.

Schedule 4 of the bill amends the tax law to allow a deduction for donations of small parcels of shares in listed public companies to deductible gift recipients, known as DGRs. The amendments will allow taxpayers a tax deduction where they make a gift to a DGR of shares in a listed public company that were acquired more than 12 months before making the gift and are valued at less than $5,000. Labor supports this proposal and efforts to encourage philanthropy in Australia. The bill amends the Income Tax Assessment Act 1997 to update the list of deductible gift recipients. Labor supports this measure in schedule 5 and wishes the organisations listed in it well.

Schedule 6 extends eligibility for tax deductions for a contribution to a DGR where a ‘minor benefit’ is for a fundraising event. Schedule 6 proposes to relax the eligibility threshold for minor benefits to allow deductions for contributions of more than $150 (it is currently $250) where the market value of the minor benefit is no more than $150 (it is currently $100) and 20 per cent of the value of the consideration (it is currently 10 per cent)—whichever is the lesser of these. Labor supports these measures to assist charities.

Schedule 7 corrects a defect in the definition of ‘exempt entity’ by ensuring the definition covers all entities exempt from tax under the tax law. This bill will change the definition of ‘exempt entity’ in the Income Tax Assessment Act 1997 to include any entity if all of its income is exempted by any Commonwealth legislation or if it is an untaxable Commonwealth entity. This will ensure that ancillary funds and prescribed private funds can donate to tax exempt state, territory and Commonwealth bodies, such as public ambulance services, research authorities and cultural institutions. That was the original intent of the 2005 legislation. Labor supports the proposals but notes this is another example of poor drafting, which has taken some two years to fix.

Schedule 8 amends the venture capital provisions to relax eligibility requirements for the concessional treatment of foreign residents investing in venture capital limited partnerships. I did emphasise foreign residents—