Second Reading Speech
by the Minister for Finance, the Hon. J.S. Dawkins, M.P.This Bill to amend the Income Tax Law will give effect to some of the taxation proposals announced by the Treasurer tonight.
The government's reasons for making those and other changes are set out in the statement and it seems unnecessary for me to go over the same ground again in this introductory speech.
The measures included in the Bill affect taxpayers in the 1982-83 year and, for administrative reasons, need to be given immediate legislative effect.
A further Bill covering the balance of the taxation initiatives announced tonight will be introduced in the budget sittings.
Among concessions being terminated by this Bill are the two year write-off for the cost of converting oil-fired plant to an alternative energy source and the 40 per cent conversion allowance for the cost of non-oil-fired plant installed to replace oil-fired plant.
As indicated in tonight's statement, neither of these deductions will be available where the expenditure is incurred under contracts entered into after today or the conversion work is commenced after today.
The special 100 per cent depreciation allowance for petroleum fuel storage facilities will also cease in respect of facilities acquired under a contract entered into after today and facilities that the taxpayer starts to construct after today.
In a case where fuel storage facilities continue to qualify for the special write-off, an additional eligibility requirement will be that they be in use for the purpose of producing assessable income or installed ready for use for that purpose before 1 July 1984.
Amendments proposed by the Income Tax Assessment Amendment Bill 1983 that is already before the House will give effect to certain concessions for primary producers announced by the previous government.
By that Bill the special rate of depreciation on a range of primary production plant, including structural improvements for the storage of grain, hay or fodder, is to be increased from 20 per cent to 33 1/3 per cent, broadly with effect from 19 July 1982.
As announced earlier this evening the over-generous 33 1/3 per cent rate is to be discontinued and the 20 per cent rate re-instated.
The 20 per cent rate will, however, apply only to eligible plant and improvements acquired under a contract entered into after today or which the taxpayer commenced to construct after today.
Mr Speaker, to clear the way for implementation of the government's Medicare policy, the rebate for basic health insurance contributions is by this Bill to be discontinued in respect of premiums paid to secure cover after 30 June 1983.
The Bill also makes provision, as part of an overall package of measures to apply in the housing area, for the termination from 30 June 1983 of the income tax rebate introduced by the former government in last year's budget.
That rebate, which applied to the portion of interest payments that exceeded 10 per cent per annum on loans of up to $60,000, was quite inequitable in the way it directed assistance away from those most in need.
The earlier - the March 1982 - home loan interest rebate will, of course, remain in the law and legislation to modify it as proposed by the Treasurer this evening will be introduced in the budget sittings.
Finally, the Bill also gives effect to the proposal to withdraw the general exemptions from withholding tax in respect of interest on the overseas borrowings of so-called "Australian entities" and the Australian Industry Development Corporation.
The exemption now available in respect of interest on overseas borrowings of Australian resident companies by way of widely distributed bearer debentures issued overseas will not be disturbed and, as I will explain later, new provisions will maintain exemption for government and government authority borrowings affected by the withdrawal of existing exemptions.
Withdrawal of the two exemptions will apply to interest on loans raised in pursuance of contractual obligations entered into after today.
Interest on existing loans will not be affected.
In addition, interest on any loans which are raised in pursuance of contractual obligations entered into after today, and which meet the requirements of the existing law may continue to be exempt, but only where the interest is paid on or before the date on which the legislation is enacted and is attributable to that interim period.
Exemption of interest on the overseas borrowings of the States, and of Commonwealth and State authorities, which are raised in pursuance of contractual obligations entered into after today will be maintained by a new provision.
Exemption from withholding tax for interest on external Commonwealth loans at present operates where there is a determination by the Treasurer that exemption should apply in relation to the loan.
The Bill provides for this procedure to apply also to borrowings of the States, and of Commonwealth and State authorities.
The Bill provides, however, that a certificate will not be given if the funds from a particular borrowing will be used by an authority in direct competition with private sector enterprises.
A memorandum explaining the technical features of the Bill will be made available to Honourable Members and I think that I do not need to say more at this stage.
I commend the Bill to the House.