Senator FIFIELD (Victoria) (12:26 PM) -I rise to speak on the Tax Laws Amendment (2010 Measures No. 2) Bill 2010. I note that, while the vast majority of this bill is non-controversial, there are certain elements in schedule 1 that are of concern to stakeholders and the coalition, which I will outline shortly. I also note at the outset the coalition’s disappointment at the way the government has handled this piece of legislation. It has rushed this bill through parliament and did not give the Senate Economics Legislation Committee adequate time to thoroughly analyse the bill in detail. The government facilitated rushed hearings and the committee was not briefed by Treasury officials prior to the commencement of hearings. In fact, Treasury did not appear before the committee until the last day of hearings.
But, despite the rushed process, the submissions and the hearings of the committee inquiry have managed to expose a number of issues of concern and outline recommendations, particularly with regard to schedule 1. Schedule 1 seeks to amend the non-commercial loan rules in division 7A of the Income Tax Assessment Act 1936 to prevent a shareholder of a private company or an associate of the shareholder accessing tax-free dividends through the use of company assets for less than their market value. The schedule also makes a range of other technical amendments seeking to strengthen the non-commercial loan rules by ensuring that they cannot be circumvented by the use of corporate limited partnerships or by interposing entities between a private company and its shareholders.
The committee made three main recommendations: firstly, that the bill be amended so that company title apartments, where the company title arrangement, its memorandum and articles create a right for the occupier, are clearly excluded from its coverage before the bill is passed; secondly, that the Commissioner of Taxation review draft ruling 2009/D8 following passage of the schedule 1 amendments to ensure it is operating appropriately; and, thirdly, that item 2 of the bill, dealing with the commencement date of the provisions, be amended to reflect that schedule 1 take effect from 1 July 2010. The committee was of the view that this time frame strikes the appropriate balance between providing taxpayers with time to prepare for the changes and the need to strengthen the integrity of the tax laws.
The coalition understands that the government is making amendments to the section dealing with company title apartments and we support that, but we understand the government is not making any changes to the commencement date. The coalition supports the committee’s bipartisan view that the commencement date should take effect from 1 July 2010. The committee’s report stated:
Throughout the course of the inquiry, this particular feature of Schedule 1 received much criticism, stakeholders generally of the view that the retrospective nature of the changes does not provide taxpayers with the opportunity to restructure their affairs if they will be unintentionally affected by the changes.
That is on page 14 of the report. However, despite these concerns the government will stick to the 1 July 2009 date. Why? Because they have already banked and spent the money. Good tax law has been thrown out of the window because of this government’s addiction to spending.
In total there are six schedules to this bill. Leaving aside schedule 1, the remaining five are less controversial. Schedule 2 of this bill seeks to amend taxation laws to extend tax file number withholding arrangements to closely held trusts including family trusts to facilitate data matching and enhance compliance. Currently, arrangements for TFN withholding apply to various entities such as unit trusts that pay or distribute income but not to situations involving closely held trusts.
Schedule 3 exempts the value of the Higher Education Contribution Scheme-Higher Education Loan Program, known as HECS-HELP, benefit received by an eligible applicant for income tax. The benefit gives eligible recipients a reduction in their HECS debt repayment and/or their HELP debt repayment or, in some cases, where a repayment is not required due to low income, a direct reduction in their HELP debt.
Schedule 4 makes amendments to the list of deductible gift recipients in the Income Tax Assessment Act 1997 to add the Sichuan Earthquake Surviving Children’s Education Fund and the Bali Peace Park Association to the list. It also seeks to extend the period for which the Yachad Accelerated Learning Project Ltd may collect deductible gifts for another three years. At this point, I should indicate that I am an unpaid member of the advisory board of the Yachad Accelerated Learning Project.
Schedule 5 seeks to make the Global Carbon Capture and Storage Institute’s income tax exempt for a four-year period. The aim of this institute is to accelerate the development and global adoption of safe commercially and environmentally sustainable carbon capture and storage technology.
The last schedule in this bill, schedule 6, seeks to repeal a large number of provisions-over 100-in the tax laws that provide the Commissioner of Taxation with an unlimited period to amend taxpayers’ assessments. This will reduce the volume of unnecessary and redundant provisions in the taxation laws and provide more certainty to taxpayers in their taxation affairs.
Question agreed to.
Bill read a second time.