Senator FIFIELD (Victoria) (Deputy Manager of Opposition Business in the Senate) (11:15 AM) -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 The former coalition government recognised that those rules had become outdated and that the global economy had significantly changed since those rules were introduced.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.