Bills Digest no. 17 2006–07
Tax Laws Amendment (2006 Measures No. 2) Bill
2006
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Tax Laws Amendment (2006 Measures No. 2)
Bill 2006
Date introduced:
29 March 2006
House: House of Representatives
Portfolio: Treasury
Commencement:
Some items commenced on
the day the Act received Royal Assent (22 June 2006). Other
amendments were retrospective and commenced on a previous date.
Several items commenced after the commencement of other Acts. The
full table of commencement dates is at clause 2 of the
Bill.
This is an
omnibus Bill which amends various taxation laws. The Bill was
passed in the Senate on 15 June 2006 and received Royal Assent on
22 June 2006.
The Bill includes seven unrelated Schedules
which make amendments to various taxation acts. The amendments are
briefly outlined below. Further information can be found in the
Explanatory Memorandum.(1)
Schedule 1 amends the Income Tax
Assessment Act 1997 (ITAA 1997) to ensure that ex-gratia lump
sum payments made to personnel involved in the F-111 Deseal/Reseal
program are exempt from income tax.
This schedule attracted the most comment
during debate in the House and Senate. Under the F-111
Deseal/Reseal Ex-gratia Lump Sum Payment program, service and
civilian personnel who were exposed to chemicals while working on
the F-111 deseal/reseal project receive a payment of either $10,000
or $40,000. The government has not accepted any liability for
health complaints associated with work on the program. In his
Second Reading speech the Assistant Treasurer stated:
The government is making the one-off ex gratia lump sum payments
from the 2005-06 income year to certain personnel who experienced a
unique working environment in the maintenance of F111 aircraft fuel
tanks.
The payments are made in recognition of the difficulties
eligible personnel suffered in the environment in which they
worked, regardless of whether there is evidence of any adverse
health impacts from that work environment.(2)
Senator Andrew Murray of the Australian
Democrats commented:
Clearly there is no price that can be placed on
one s health and wellbeing. Whilst I appreciate, to an extent, the
government s attempt to address the harm caused to a number of
Department of Defence employees in the course of their duty, I must
also condemn their corporate style admit no liability approach to
this matter. Advice from the F-111 Deseal/Reseal Support Group
indicates that the amounts in question are insufficient to help
people battling illnesses due to chemical
exposure.(3)
Schedule 2 amends ITAA 1997 to add two new
organisations to the list of Deductible Gift Recipients (DGRs).
Donations made to DGRs are eligible as a tax deduction for
individual tax payers. The two organisations added are Playgroup
Victoria Inc. and St Michael s Church Restoration Fund (until 23
February 2007).
This Schedule also amends the ITAA 1997 to
correct some unintended consequences from the rewrite of the
Capital Gains Tax provisions which were part of the Tax Law
Improvement Project. The amendments restore the law to ensure that
it operates as intended and as it previously applied under the ITAA
1936. Senator Murray commented that this was:
a reminder that these acts are so complicated
that, even when the experts draft the changes, some years later
problems and difficulties can be discovered.(4)
Schedule 4 amends the ITAA 1997 to extend the
circumstances in which a taxpayer may choose to obtain a capital
gains tax roll-over when an asset is compulsorily acquired. The
amendments are backdated to apply to compulsory acquisitions dating
after 11 November 1999. This was part of the government s
announcement of its Stage 2 response to the Ralph Review of
Business Taxation.(5)
The Explanatory Memorandum states that the
financial implications of this amendment are unquantifiable. While
an initial impact of $5million per annum is forecast, the
Explanatory Memorandum notes that there is expected to be a much
larger cost in 2005-06 due to the retrospective start date of the
measure, and the fact that the amendments favour the taxpayer in
all cases.(6)
Schedule 5 amends the ITAA 1997 to limit the
circumstances in which the franking deficit tax offset is reduced,
applying from 1 July 2002 onwards (that is, from the commencement
of the simplified imputation system).
Schedule 6 amends the Superannuation
Guarantee (Administration) Act 1992 to extend the right to
choose a superannuation fund to employees whose superannuation
arrangements are determined by state laws. The amendments ensure
that employers are not required to make superannuation guarantee
contributions to a fund specified in state law, as well as to an
employee s chosen fund. In the second reading speech the Assistant
Treasurer stated:
The government will override state laws which
require employers that are constitutional corporations to make
contributions to a superannuation fund specified in that law. This
will particularly benefit coalminers in Queensland, Western
Australia and New South Wales as employers will be able to
contribute to a superannuation fund of an employee s choosing from
1 July 2006.(7)
Schedule 7 makes technical corrections and
amendments to taxation laws. There is no financial impact arising
from the corrections.
Endnotes
- Hon. Peter Costello MP, Explanatory
Memorandum: Tax Laws Amendment (2006 Measures No.2) Bill 2006,
29 March 2006.
- Hon. Peter Dutton, MP, Minister for Revenue
and Assistant Treasurer, Second Reading Speech: Tax Laws Amendment
(2006 Measures No. 2) Bill 2006 , House of Representatives,
Debates, 29 March 2006, p. 19.
- Senator Andrew Murray, Second Reading Speech:
Tax Laws Amendment (2006 Measures No. 2) Bill 2006 , Senate
Debates, 15 June 2006, p. 137.
- ibid.
- Hon. Peter Costello MP, Treasurer, press
release: The New Business Tax System: Stage 2 Response,
available at:
http://www.treasurer.gov.au/tsr/content/pressreleases/1999/074.asp#M,
accessed 18 December 2006.
- Explanatory Memorandum, op. cit.
- Hon. Peter Dutton MP, op. cit.
Bronwen Jaggers
23 December 2006
Law and Bills Digest Section
Parliamentary Library
This paper has been prepared to support the work of the
Australian Parliament using information available at the time of
production. The views expressed do not reflect an official position
of the Parliamentary Library, nor do they constitute professional
legal opinion.
Staff are available to discuss the paper's
contents with Senators and Members and their staff but not with
members of the public.
ISSN 1328-8091
© Commonwealth of Australia 2007
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
reproduced or transmitted in any form or by any means, including
information storage and retrieval systems, without the prior
written consent of the Parliamentary Library, other than by members
of the Australian Parliament in the course of their official
duties.
Published by the Parliamentary Library, 2007.
Back to top