Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

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

Leave granted.

The speech read as follows—

Schedule 1 to this Bill implements the first part of the Government’s decision to reform Australia’s foreign source income anti-tax-deferral (attribution) rules that was announced as part of the 2009-10 Budget.

This Schedule repeals the foreign investment fund, or FIF, provisions and the deemed present entitlement rules that are contained in the Income Tax Assessment Act 1936.

This measure will assist Australian managed funds and other businesses to compete internationally by reducing the complexity and compliance costs that are associated with the making of foreign investments.

The repeal of the FIF and deemed present entitlement rules further contributes to the Government’s objective of promoting Australia as a financial hub in our region. This will support Australian jobs.

This measure, being part of wider reforms to better target Australia’s attribution rules, will also further simplify the taxation law and bring consolidation of the two income tax Acts a significant step closer.

Full details of the measures in this Bill are contained in the explanatory memorandum.

Mitch Fifield (Victoria, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010. This bill repeals the Foreign Investment Fund provisions, the FIF provisions, and the deemed present entitlement rules that are contained in the Income Tax Assessment Act 1936. These changes seek to reduce the complexity in compliance costs that are associated with the making of foreign investments.

These changes are a result of a review of attribution rules by the Board of Taxation initiated by the former coalition government in October 2006. The existing attribution rules were introduced in 1992 and were based on the rules developed in the 1960s by the United States. The former coalition government recognised that those rules had become outdated and that the global economy had significantly changed since those rules were introduced. In its report, which the government received in September 2008, the Board of Taxation argued that the abolition of the FIF rules would significantly reduce compliance costs for Australian managed funds and would enhance global competitiveness and attractiveness to foreign investors. The board also argued that their recommended changes would significantly reduce compliance costs for Australian companies and superannuation funds. The amendments are based on the recommendations made by the Board of Taxation to reduce compliance costs for affected taxpayers, and the coalition supports these changes.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I thank Senator Fifield for his contribution to the second reading debate and I commend the bill to the Senate.

Question agreed to.

Bill read a second time.