House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Attorney-General, the Hon Robert Mcclelland Mp

Schedule 12 - Innovation, Industry, Science and Research amendments

961 This Schedule contains amendments to the Pooled Development Funds Act 1992 (within the Innovation, Industry, Science and Research portfolio) to remove differential treatment of same-sex couples and their children:

Pooled Development Funds Act 1992

962 The object of the Pooled Development Funds Act 1992 (the PDF Act) is to develop, and demonstrate the potential of, the market for providing patient equity capital (including venture capital) to small or medium-sized Australian enterprises that carry on eligible businesses. To achieve this object, the Act establishes a scheme under which companies providing such capital can become pooled development funds (PDFs), which entitles those companies to more competitive tax treatment.

Item 1

963 This item removes subsection 4(1) of the definition of 'de facto spouse' which includes only opposite-sex partners. Item 5 inserts a definition of 'de facto partner' which will include same-sex partners and opposite-sex partners.

Item 2

964 This item removes from the subsection 31(2) definition of 'associate' the phrase '(including a person who is such a relation by adoption)'. Adoptive relationships will be included in the insertion of Item 7 of this Schedule.

Item 3

965 This item amends the definition of 'associate' in subsection 31(2) by replacing the term 'de facto spouse' with 'de facto partner'. This will extend the range of persons who can be considered an associate of a person who is a shareholder in a PDF to include a person in the definition of 'de facto partner' to be inserted at Item 5 of this Schedule.

Item 4

966 This item inserts the key definition of 'child' into subsection 31(2) of the PDF Act. This will extend the range of persons who can be considered an 'associate' of a person who is a shareholder in a PDF to include a child who is a product of a relationship the person has or had as a couple with another person. A description of the key definition of a 'child' can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 5

967 This item inserts the key definition of 'de facto partner' into subsection 31(2) of the PDF Act. The definition provides that 'de facto partner' has the meaning given in the Acts Interpretation Act. This will extend the range of persons who can be considered an associate of a person who is a shareholder in a PDF to include someone who is in a same-sex relationship with that shareholder. A description of the key definition of a 'de facto partner' can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 6

968 This item inserts the key definition of 'parent' in subsection 31(2) of the PDF Act to extend the range of persons who can be considered an associate of a person who is a shareholder in a PDF to include someone who is the parent of a child within the meaning of the definition inserted by Item 4 of this Schedule. A description of the key definition of a 'parent' can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 7

969 This item inserts subsection 31(2AA) into the PDF Act. Subsection 31(2AA) is a tracing rule that will allow the relationships listed in subsection 31(2) and are not covered by the insertion of Items 4, 5 and 6 of this Schedule to be traced through the definition of 'parent and 'child'. It will also trace adoptive relationships to replace the phrase removed by Item 2 of this Schedule. A description of the tracing rule can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 8

970 This item inserts a transitional provision to ensure that no person's current share holding in a PDF is taken to be in contravention of section 31 only because of these amendments to the PDF Act. However, if a person acquires additional shares that are not bonus shares, their initial shares and their bonus shareholdings will be taken into account in determining if they contravene section 31 of the PDF Act or not.