Second Reading Speech
BY THE TREASURER THE HON P COSTELLO MPI move that the Bill now be read a second time.
Mr Speaker, this Bill will amend the income tax law so that the aged pensions bonus payments will be exempt from income tax, and will not be taken into account in calculating their net exempt income for the purposes of determining deductibility of tax losses of earlier income years.
This will ensure that persons entitled to receive the bonus payments will receive the full benefit of those payments.
This Bill also amends the Income Tax Regulations to provide further assistance to senior Australians by increasing the maximum pensioner tax rebate and the tax rebate for low income aged persons. These rebates will be increased by $250 (for single people) and $175 (for each of a couple) per year. These increases will come into effect from 1 July 2000. The higher rebates will ensure an extra 70,000 pensioners and self-funded retirees are not required to pay tax and will provide an extra tax cut to 330,000 senior Australians.
The last income tax measure associated with this Bill removes the savings tax offset.
Under the new tax system this rebate will no longer be necessary as elements of the package - including the increase in the personal income tax threshold, significantly reduced marginal rates and refundable imputation credits - will have a major impact on incentives for Australians to work and save. Taxpayers will still be able to claim the offset in their income tax returns for the 1998-99 income year.
Full details of the measures in the Bill are contained in the explanatory memorandum circulated to Honourable Members.
I commend the Bill to the House.