Second Reading Speech
Mr Brough (Minister for Revenue and Assistant Treasurer)
I move:
That the bill be now read a second time.
This bill amends various taxation laws to implement a range of changes and improvements to Australia's taxation system.
Amendments contained in this bill ensure that parents who work fewer than 15 hours a week continue to be eligible for the child-care tax rebate.
To be eligible for the rebate, families must receive child-care benefit for approved care and meet the child-care benefit work-training or study test. The Welfare to Work package introduces a requirement that a taxpayer must work, train, or study for at least 15 hours a week-or 30 hours over two weeks-to meet the child-care benefit work-training or study test.
Taxpayers will not need to satisfy the new hourly requirements to receive the child-care tax rebate. Taxpayers will continue to be eligible for the rebate if they receive child-care benefit for approved care and work, train or study at some time in the week.
This bill also gives effect to the government's announcement that it will amend the income tax law to ensure certain not-for-profit organisations are not subject to tax on mutual receipts as a result of the Coleambally Federal Court decision handed down on 7 September 2004.
Under the mutuality principle, membership subscriptions and receipts from other mutual dealings with members are not liable for income tax. The court's decision, which held that the principle of mutuality cannot apply where an organisation is prevented from distributing to members, would potentially affect between 200,000 to 300,000 not-for-profit entities including clubs, professional organisations and some friendly societies. The government's amendment today restores the longstanding benefits of the mutuality principle that applied prior to the Coleambally decision.
Further refinement to the consolidation regime is also contained in this bill. The amendment ensures the method for calculating the rate at which the head company of a consolidated group can recoup a joining entity's losses, operates as intended. It allows consolidated groups to round the available fraction for a bundle of losses to the first non-zero digit, if rounding to three decimal places would result in an available fraction of nil. The amendment improves the consolidation regime by ensuring that the available fraction rounding rules do not prevent consolidated groups from being able to deduct losses held by a joining entity at the joining time.
Also, this bill amends the lists of deductible gift recipients in the Income Tax Assessment Act 1997. Deductible gift recipient status will assist the listed organisations to attract public support for their activities.
Finally, amendments are made to the medical expenses offset to ensure that solely cosmetic procedures are no longer eligible expenses for the purposes of this offset. Specifically, solely cosmetic procedures are excluded from the medical expenses offset under two broad categories: general medical expenses and general dental expenses.
Full details of the measures in this bill are contained in the explanatory memorandum.
I commend this bill and present the explanatory memorandum.
Debate (on motion by Mr Gavan O'Connor) adjourned.