CHAPTER 1 - INTRODUCTION

Background

1.1 The Tax Laws Amendment (2004 Measures No. 3) Bill 2004 was introduced into the House of Representatives on 27 May 2004 by the Hon Ross Cameron MP, Parliamentary Secretary to the Treasurer. It was passed by the House of Representatives on 3 June 2004, and was introduced into the Senate on 15 June 2004.

Purpose of the Bill

1.2 The bill is an omnibus bill, introducing a range of measures to amend various pieces of taxation legislation. It contains three schedules of amendments, only one of which (schedule 1) is considered in this report.

Reference of the Bill

1.3 On 16 June 2004, the Senate adopted the Selection of Bills Committee Report No. 8 of 2004 and referred the provisions of the bill to the Senate Economics Legislation Committee for consideration and report.

1.4 While the Senate referred the bill as a whole to the Committee, the Selection of Bills Committee Report makes it clear that not all of the measures in the bill required consideration by the Economics Legislation Committee. The Selection of Bills Committee Report stated that the Economics Legislation Committee was to:

[provide] adequate consideration of the proposed changes to the venture capital regime.[1]

Purpose of Schedule 1

1.5 Schedule 1 relates to the tax concessions extended to venture capital investments. In his second reading speech, the Parliamentary Secretary to the Treasurer described the effect of schedule 1 as follows:

The venture capital regime was introduced to encourage new foreign investment into the Australian venture capital market and to further develop the venture capital industry. It provides a tax exemption to eligible nonresident investors on the gains made on eligible equity investments.

The amendments expand the range of venture capital investments that will qualify for the tax concession and remove minor impediments to ensure that the regime operates as intended. The tax concession will now be available for eligible investments that have been made in a holding company of a corporate group. Companies being spun-off from a corporate group or institution may also be eligible as they will be treated independently in determining eligibility for the concession.[2]

Submissions

1.6 The Committee advertised its inquiry into the Tax Laws Amendment (2004 Measures No. 3) Bill 2004 on the internet. In addition the Committee contacted a number of organisations, alerting them to the inquiry and inviting them to make a submission. A list of submissions appears at Appendix 1.

Hearings and Evidence

1.7 The Committee held one public hearing at Parliament House, Canberra, on 18 June 2004. Witnesses who appeared before the Committee at that hearing are listed in Appendix 2.

1.8 Copies of the Hansard transcript are tabled for the information of the Senate. They are also available through the internet at https://www.aph.gov.au/hansard.