Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Hansard source

First, I would like to thank those senators who made a constructive contribution to this debate. The amendments in schedule 1 of this bill allow trust beneficiaries to continue to use the primary production averaging and farm management deposits provisions in a trust-loss year. The amendments broadly restore the position that existed before the High Court decision in Bamford v Commissioner of Taxation, which necessitated the commissioner with­drawing a public ruling that in certain circumstances the beneficiary could be eligible for the primary production averaging and farm management deposits rules in a trust-loss year. The amendments secure continuity for taxpayers because they apply from the 2010-11 income year, and the commissioner's ruling applies up to and including the 2009-10 income year.

The amendments in schedule 2 of this bill ensure that, where permitted by the trust deed, the streaming of capital gains and franked distributions, including any attached franking credits, of a trust to specified beneficiaries can be effective for tax purposes. The amendments also introduce specific anti-avoidance rules to address the inappropriate use of exempt entities to shelter the taxable income of a trust. These amendments will provide more certainty for the trustees and beneficiaries of trusts that stream capital gains and franked distri­butions, including any attached franking credits. The government is committed to a broader review of the taxation of trust income. It is important to simplify and rewrite the rules, which will give more certainty to the users of trusts, particularly small businesses and farmers.

Schedule 3 of the bill amends the provisions in the taxation law related to the National Rental Affordability Scheme tax offset provisions. The amendments simplify the operation of NRAS for participants by introducing the concept of an NRAS consortium which allows a broader range of arrangements to participate in NRAS. The amendments provide some additional flexibility to NRAS participants in how the incentive is shared between members of the NRAS consortium. The amendments do this by establishing an election to allow approved participants to relinquish their entitlements to an NRAS tax offset in favour of other members of their NRAS consortium. The amendments also address minor technical issues that have arisen from the interaction of the tax law and the National Rental Affordability Scheme Act 2008 and also ensure that certain payments provided under NRAS indirectly, such as through the NRAS consortium, are treated as non-assessable non-exempt income.

Schedule 4 of this bill implements an important measure to help encourage more Australians into paid employment by removing the disincentive for younger dependent spouses without children to remain out of the workforce. From 1 July 2011, taxpayers with a dependent spouse born on or after 1 July 1971 will no longer be eligible for the dependent spouse tax offset. This means that the offset will be gradually phased out as the population ages. Dependent spouses aged 40 or over will not be affected by this measure, nor will dependent spouses with children or taxpayers whose dependent spouse is a carer, an invalid or permanently unable to work. Taxpayers eligible for the zone, overseas forces and overseas civilian tax offsets are also not affected by this measure.

Schedule 5 amends the tax laws to reform the current statutory formula method for determining the taxable value of car fringe benefits by removing the current incentive for people to drive salary sacrificed and employer provided vehicles further to increase their tax concession. Under the current statutory formula method the calculated fringe benefit from a salary sacrificed car decreases as the distance travelled by the vehicle increases. People can therefore increase their taxation concession by driving their vehicle further. This reform will replace the current statutory rates with a single rate of 20 per cent that applies regardless of the distance travelled. This reform implements another recommendation of the Australia's Future Tax System review. This reform will apply to new contracts entered into after the budget announcement of 10 May this year and will be phased in over four years. This bill deserves the support of the parliament, and I commend the bill to the Senate.

Question agreed to.

Original question, as amended, agreed to.

Bill read a second time.