Second Reading Speech
Senator Vanstone (Minister for Family and Community Services and Minister Assisting the Prime Minister for the Status of Women)I table the explanatory memorandum relating to the bill and move:
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
Leave granted.
The speech read as follows-
This bill amends the Income Tax Assessment Act 1936, Income Tax (Transitional Provisions) Act 1997 and the Income Tax Assessment Act 1997 to give effect to several tax measures that have been announced by the Government.
Firstly, the bill will provide exemptions from Australian tax for temporary residents. This will assist Australian businesses seeking to attract key personnel to Australia. It recognises the vital importance to Australia of an internationally competitive tax regime and allows businesses to reduce the additional extra costs they typically incur in employing temporary residents.
Removing disincentives to the temporary employment of skilled overseas workers will be of particular benefit for skill intensive industries, and will assist in attracting and retaining regional headquarters and offices.
Equally importantly, the exemptions will make it easier to attract workers in areas where Australia is experiencing skill shortages.
The amendments include an exemption from Australian tax on foreign source income and capital gains for a maximum period of 4 years to temporary residents. This exemption applies only where that income or gain is not associated with Australian employment or services performed while a resident of Australia. The amendments will also exempt temporary residents from interest withholding tax obligations associated with overseas liabilities.
Secondly, the bill exempts from income tax compensation payments for the loss of defence remuneration where the remuneration itself would have been exempt from income tax.
Thirdly, the bill amends the Income Tax Assessment Act 1997 to treat previously assessable income as not assessable where it must be repaid and that repayment occurs in a later year of income. It also amends the Income Tax Assessment Act 1936 to permit amendments of income tax assessments for the year in which the amount was originally treated as assessable income despite the time limit for amendments to assessments being exceeded.
Fourthly, the bill also increases the level of expenses above which the medical expenses tax offset applies from $1,250 per annum to $1,500 per annum. For the 2002-2003 and later income years, the medical expenses tax offset will be available at a rate of 20 per cent of any net medical expenses above $1,500 in an income year. This measure was announced in the 2002-2003 Budget.
Finally, an income tax exemption is granted to the Commonwealth Games Federation. The exemption will apply to income received by the Federation in the course of staging the Melbourne Commonwealth Games 2006 and applies income derived by the Federation on or after 1 January 2000 and before 1 July 2007.
Full details of the measures in this bill are contained in the explanatory memorandum.
I commend this bill.