House of Representatives

Explanatory Memorandum

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

Schedule 14 - Treasury amendments

984 This Schedule contains amendments to the following legislation within the Treasury portfolio to remove differential treatment of same-sex couples and their children:

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A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999

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Corporations Act 2001

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Financial Sector (Shareholdings) Act 1998

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Foreign Acquisitions and Takeovers Act 1975

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Fringe Benefits Tax Assessment Act 1986

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Income Tax Assessment Act 1936

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Income Tax Assessment Act 1997

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Insurance Acquisitions and Takeovers Act 1991 , and

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Life Insurance Act 1995

Part 1-Amendment of tax laws

985 This Part amends some Acts that determine Commonwealth taxes that Australians are subject to. The Acts being amended are:

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A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999 (the Medicare Levy Surcharge Act),

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Fringe Benefits Tax Assessment Act 1986 (the FBT Assessment Act),

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Income Tax Assessment Act 1936 (ITAA36), and

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Income Tax Assessment Act 1997 (ITAA97).

986 The amendments provide for assessing entitlement to tax concessions, and imposing tax obligations, in a manner that does not discriminate on the basis of sexual preference or marital status.

987 The main amendments treat same-sex relationships in the same way for tax purposes as marital relationships. This extends to treating the children of such relationships in the same way as the children of a marriage. It also extends to treating other family relationships in the same way they would be treated if the same-sex relationship were a marriage and the children of the relationship were the natural children of both members of the couple.

988 The current tax law generally treats an opposite-sex de facto relationship in the same way as a marital relationship but there are exceptions (particularly in the treatment of children of such relationships). The amendments remove those exceptions.

989 The amendments apply from the start of the next tax accounting period, so that only one treatment applies to any given period. For the FBT Assessment Act, that period is the FBT year starting on 1 April 2009. For the other Acts, it is the 2009-2010 income year, which generally starts on 1 July 2009.

A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999

990 The purpose of this Act is to impose a Medicare levy surcharge of 1 per cent of income on taxpayers where their income exceeds a certain threshold and they do not have private patient hospital insurance. In addition, this Act requires the value of a taxpayer's fringe benefits to be included as income for determining liability for the Medicare levy surcharge. In this way a taxpayer's total income is considered in determining their liability for the Medicare levy surcharge irrespective of whether they receive their remuneration through cash or fringe benefits. This ensures a more equitable treatment between those taxpayers who are remunerated by cash and those who are remunerated through fringe benefits.

Item 1

991 Subsection 7(1) of the Medicare Levy Surcharge Act expands the ordinary meaning of 'married' for the purposes of the Medicare Levy Surcharge Act to include opposite-sex de facto couples who have lived together as husband and wife on a bona fide domestic basis, although not legally married to each other. Division 4 of the Act provides particular rules for couples coming within this definition. However, by referring to a relationship between a 'man and a woman' who have lived together as 'husband and wife' subsection 7(1) currently excludes same-sex de facto couples.

992 To remove discrimination, this item repeals subsection 7(1) of the Medicare Levy Surcharge Act and substitutes a new subsection. New subsection 7(1) will provide that the Act applies to two persons (whether of the same or opposite sex) as if they were married if:

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their relationship is registered for the period under a law of a State or Territory prescribed for the purposes of subsection 22B of the Acts Interpretation Act as a kind of relationship prescribed for the purposes of that subsection, or

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they lived together in a relationship as a couple on a genuine domestic basis for the period, although not legally married to each other.

993 The new provision will apply to both same-sex and opposite-sex couples equally. This definition incorporates elements of the key definition of 'de facto partner'. A description of this key definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

994 The item also inserts a new subsection 7(1A) to provide that someone who is legally married or in a registered relationship is treated as not being legally married or in that registered relationship for the purposes of the Medicare Levy Surcharge Act if they are living in a genuine domestic relationship with someone else. This replicates the effect of current paragraph 7(1)(a) and extends it to cover registered relationships. The subsection ensures that only one relationship will be recognised during any period.

Item 2

995 This item provides that the amendment of the Medicare Levy Surcharge Act made by Item 1 will apply from the 2009-2010 year of income and will align with the application date of amendments removing discrimination against same-sex couples and their children in the Income Tax Assessment Act 1997 and Income Tax Assessment Act 1936 .

Fringe Benefits Tax Assessment Act 1986

996 This Act provides for the assessment of the amount of tax payable by an employer for benefits provided to its employees and their associates.

Item 3

997 The term 'relative' is defined in subsection 136(1) of the FBT Assessment Act to have the meaning given by subsection 995-1(1) of the ITAA97. This item inserts a note at the end of section 58V of the FBT Assessment Act to alert the reader to the possibility that section 960-255 of the ITAA97, which provides rules for determining when certain family relationships are recognised, may affect the meaning of 'relative' for the purposes of this subsection.

998 Section 960-255 is inserted by Item 90 of this Schedule.

Item 4

999 This item inserts a note at the end of paragraph (h) of the definition of 'fringe benefit' in subsection 136(1) of the FBT Assessment Act to alert the reader to the possibility that section 960-255 of the ITAA97, which provides rules for determining when certain family relationships are recognised, may affect the meaning of 'relative' in this definition.

1000 Section 960-255 is inserted by Item 90 of this Schedule.

Item 5

1001 This item inserts a definition of 'parent' into subsection 136(1) of the FBT Assessment Act, referring to the definition in subsection 995-1(1) of the ITAA97, which is inserted by Item 92 of this Schedule.

Item 6

1002 This item provides that the amendments to the FBT Assessment Act made by this Schedule will apply in relation to the FBT year starting on 1 April 2009, and to subsequent years.

Income Tax Assessment Act 1936

1003 This Act, together with the ITAA97, provides for the assessment of the amount of income tax taxpayers are liable to pay.

Item 7

1004 This item inserts a definition of 'parent' into subsection 6(1) of the ITAA36, referring to the definition in subsection 995-1(1) of the ITAA97, which is inserted by Item 92 of this Schedule.

Items 8 - 12, 14

1005 These items insert notes to alert the reader to the possibility that section 960-255 of the ITAA97, which provides rules for determining when certain family relationships are recognised, may affect the meaning of 'family'.

1006 Section 960-255 is inserted by Item 90 of this Schedule.

Item 13

1007 This item amends table item 3 in subsection 73AA(1) of the ITAA36 as a consequence of the amendments made by this Schedule to Subdivision 126-A of the ITAA97.

Item 15

1008 This item repeals the definition of 'de facto marriage' in section 102AAB of the ITAA36. The concept of 'de facto marriage' extends to opposite-sex couples who have lived together as husband and wife on a bona fide domestic basis, although not legally married to each other. By referring to a relationship between two people who have lived together 'as husband and wife' this definition excludes same-sex de facto couples.

1009 The concept of 'de facto marriage' in the ITAA36 is replaced by the definition of 'de facto relationship', which is inserted by Item 16 of this Schedule.

Item 16

1010 This item inserts a definition of 'de facto relationship' in section 102AAB of the ITAA36. It replicates the current definition of 'de facto marriage' but applies it equally to same-sex and opposite-sex relationships and extends it to cover relationships registered under prescribed State or Territory laws.

Item 17

1011 This item amends subparagraph 102AAH(1)(a)(i) of the ITAA36 as a consequence of the amendment made by Item 18 of this Schedule.

Item 18

1012 This item replaces the term 'post-marital family trust' with the term 'post-marital or post-relationship family trust' in subsection 102AAH(2) of the ITAA36 to better reflect the fact that such family trusts may arise on the breakdown of a de facto relationship as well as of a marriage.

Item 19

1013 This item amends subparagraph 102AAH(2)(a)(ii) of the ITAA36 as a consequence of the amendments made by Items 15 and 16 of this Schedule.

Item 20

1014 This item inserts a note at the end of subsection 102AAH(3) of the ITAA36 (which explains when a trust is a family relief trust) to alert the reader to the possibility that section 960-255 of the ITAA97 may affect the meaning of the categories of relationships set out in subsection 102AAH(3). Section 960-255 of the ITAA 97 provides rules for determining when certain family relationships are recognised.

1015 Section 960-255 is inserted by Item 90 of this Schedule.

Item 21

1016 Paragraph 102AGA(2)(a) of the ITAA36 sets out one circumstance that satisfies the requirements of subsection 102AGA(2). At present, this paragraph deals with a person transferring property when their family breaks down because they cease to live with another person as the spouse of that person on a genuine domestic basis (whether or not legally married to that person).

1017 This item amends paragraph 102AGA(2)(a) to remove the words 'on a genuine domestic basis (whether or not legally married to that person)' as a consequence of the expansion of the definition of 'spouse' in the ITAA97 made by Item 95 of this Schedule.

Item 22

1018 Paragraph 102AGA(2)(b) of the ITAA36 sets out classes of people from or to whom a transfer of property may be made in order to satisfy the requirements of subsection 102AGA(2). Subsection 102AGA(2) is relevant to determining whether a particular property transfer may be considered the result of a family breakdown for the purposes of subparagraphs 102AE(2)(b)(viii) and 102AG(2)(c)(viii) of the ITAA36. Subparagraphs (i)-(iii) provide that these people may include natural parents, adoptive parents, and step-parents.

1019 This item omits the word 'natural' before 'parent' in subparagraph 102AGA(2)(b)(i). The result is that the definition of 'parent' inserted into the ITAA36 by Item 5 of this Schedule will apply in this subparagraph. This definition of 'parent' includes natural, adoptive and step-parents, as well as people who are parents because a child was the product of their relationship as a couple with another person. This amendment removes discrimination between biological and recognised non-biological parents.

Item 23

1020 This item repeals subparagraphs 102AGA(2)(b)(ii) and (iii) of the ITAA36 as they are rendered unnecessary by the broader definition of 'parent' which applies in subparagraph 102AGA(2)(b)(i) as a consequence of the amendment made by Item 22 of this Schedule.

Item 24

1021 This item amends paragraph 102AGA(2)(c) to remove the words 'on a genuine domestic basis' as a consequence of the expansion of the definition of 'spouse' in the ITAA97 made by Item 95 of this Schedule.

Item 25

1022 Subsection 102AGA(3) of the ITAA36 sets out further circumstances in which a transfer of property may be considered the result of the family breakdown for the purposes of subparagraphs 102AE(2)(b)(viii) and 102AG(2)(c)(viii) of the ITAA36.

1023 This item omits the word 'natural' before 'parent' in paragraph 102AGA(3)(a). The result is that the definition of 'parent' inserted into the ITAA36 by Item 5 of this Schedule will apply in that paragraph. This definition of 'parent' includes natural, adoptive and step-parents, as well as people who are parents because a child was the product of their relationship as a couple with another person. This amendment removes discrimination between children with biological parents and those with recognised non-biological parents.

Item 26

1024 This item amends paragraph 102AGA(3)(a) to remove the words 'on a genuine domestic basis (whether or not legally married)' as a consequence of the expansion of the definition of 'spouse' in the ITAA97 made by Item 95 of this Schedule.

Items 27 and 28

1025 These items omit the word 'natural' before 'parent' wherever occurring in paragraphs 102AGA(3)(b), and (c). The result is that the definition of 'parent' inserted into the ITAA36 by Item 5 of this Schedule will apply in these paragraphs. This definition of 'parent' includes natural, adoptive and step-parents, as well as people who are parents because a child was the product of their relationship as a couple with another person. This amendment removes discrimination between children with biological parents and those with recognised non-biological parents.

Item 29

1026 This item omits '(c),' from the definition of 'family law obligation' in section 109ZD in the ITAA36 as a consequence of amendments made to the ITAA97 by Item 73 of this Schedule.

Item 30

1027 This item amends table item 3 in subsection 124PA(1) of the ITAA36 as a consequence of the amendments made by this Schedule to Subdivision 126-A of the ITAA97.

Item 31

1028 This item inserts a note at the end of the definition of 'invalid relative' in subsection 159J(6) of the ITAA36 to alert the reader to the possibility that section 960-255 of the ITAA97, which provides rules for determining when certain family relationships are recognised, may affect the meaning of 'brother' and 'sister' in this definition.

1029 Section 960-255 is inserted by Item 90 of this Schedule.

Item 32

1030 This item inserts a note at the end of section 177D of the ITAA36 to alert the reader to the possibility that section 960-255 of the ITAA97, which provides rules for determining when certain family relationships are recognised, may affect the meaning of 'family' for the purposes of subparagraphs 177D(b)(vi) and (viii).

1031 Section 960-255 is inserted by Item 90 of this Schedule.

Item 33

1032 Part VIIB of the ITAA36 relates to the Medicare levy and the Medicare levy surcharge. Subsection 251R(2) provides that opposite-sex de facto couples living together on a bona fide domestic basis are treated as though married to each other, and not to any other person for the purposes of the Part, and any Act imposing a levy. This provision is discriminatory, as it excludes same-sex couples. This item will repeal subsection 251R(2) and substitute two new subsections to expand this concept to cover same-sex relationships.

1033 New subsection 251R(2) will provide that Part VIIB and any Act imposing the Medicare levy will apply to two persons (whether of the same or opposite sex) as if they were married if:

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their relationship is registered under a law of a State or Territory prescribed for the purposes of subsection 22B of the Acts Interpretation Act as a kind of relationship prescribed for the purposes of that subsection, or

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they lived together in a relationship as a couple on a genuine domestic basis, although not legally married to each other.

1034 The new provision will apply to same-sex and opposite-sex couples equally. This definition incorporates elements of the key definition of 'de facto partner'. A description of this key definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

1035 The item also inserts a new subsection 251R(2A) to provide that someone who is legally married or in a registered relationship is treated as not being legally married or in that registered relationship for the purposes of Part VIIB of the Act (and Medicare levy) if they are living in a genuine domestic relationship with someone else. This ensures that only one relationship will be recognised during any period. It replicates the effect of current subsection 251R(2) and extends it to cover registered relationships.

Item 34

1036 This item inserts a note at the end of subsection 251U(1) of the ITAA36 to alert the reader to the possibility that section 960-255 of the ITAA97, which provides rules for determining when certain family relationships are recognised, may affect the meaning of 'family' for the purposes of subparagraph 251U(1)(e)(iii).

1037 Section 960-255 is inserted by Item 90 of this Schedule.

Item 35

1038 Subsection 317(1) provides definitions for the purposes of Part X of the ITAA36, which relates to attribution of income in respect of controlled foreign companies.

1039 This item repeals the definition of 'de facto marriage' in subsection 317(1) of the ITAA36 as a consequence of the amendment made by Item 36 of this Schedule.

Item 36

1040 This item inserts a definition of 'de facto relationship' into subsection 317(1) to replace the definition of 'de facto marriage' repealed by Item 35 of this Schedule. The definition provides that de facto relationship means:

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a relationship between two persons which is registered under a law of a State or Territory prescribed for the purposes of subsection 22B of the Acts Interpretation Act as a kind of relationship prescribed for the purposes of that subsection, or

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a relationship between two persons (whether of the same or opposite sex) who live together in a relationship as a couple on a genuine domestic basis, although not legally married to each other.

1041 The new provision will apply to same-sex and opposite-sex couples equally. This definition incorporates elements of the key definition of 'de facto partner'. A description of this key definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 37

1042 Subsection 318(7) of the ITAA36 provides that in section 318 and any other provision of the Act insofar as it has effect in that section, a reference to the 'spouse' of a person does not include a reference to someone who is legally married to the person, but is living separately and apart from them on a permanent basis. This definition does not deal with situations in which a person's relationship is recognised under paragraph (a) of the definition of 'spouse' in subsection 995-1(1) of the ITAA97 (because the relationship is registered on a prescribed State or Territory relationship register), but has broken down.

1043 This item repeals subsection 318(7) and inserts a new subsection which takes account of registered relationships. The new subsection provides that in section 318 and any other provision of the Act that has effect for the purposes of the section, a reference to a spouse does not include:

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A spouse who is legally married to the person but living separately and apart from the person on a permanent basis, and

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A spouse within the meaning of paragraph (a) of the definition of spouse in subsection 995-1(1) of the ITAA97 who is living separately and apart from the person on a permanent basis.

1044 Therefore, for the purposes of section 318 of the ITAA36, although a couple may be legally married or have a relationship certificate, a couple living separately and apart on a permanent basis are not treated as each other's spouse because of their being legally married or having a relationship certificate.

Item 38

1045 This item amends subparagraph 328(1)(a)(i) of the ITAA36 as a consequence of the amendment made by Item 39 of this Schedule.

Item 39

1046 This item replaces the term 'post-marital family trust' with the term 'post-marital or post-relationship family trust' in subsection 328(2) of the ITAA36 to better reflect the fact that such family trusts may arise on the breakdown of a de facto relationship as well as of a marriage.

Item 40

1047 This item amends subparagraph 328(2)(a)(ii) of the ITAA36 as a consequence of the amendment made by Items 35 and 36 of this Schedule.

Item 41

1048 This item inserts a note at the end of subsection 328(3) of the ITAA36 to alert the reader to the possibility that section 960-255 of the ITAA97, which provides rules for determining when certain family relationships are recognised, may affect the meaning of the categories of relationships set out in subparagraph 328(3)(a)(iii).

1049 Section 960-255 is inserted by Item 90 of this Schedule.

Item 42

1050 Subparagraph 491(2)(a)(i) provides that for the purposes of Part XI of the ITAA36, 'relative' includes a spouse, other than a spouse who is legally married to the person but is living separately and apart from the person and has been doing so for at least 12 months. This means that while married couples will generally be considered to be relatives of each other for the purposes of this Part, married couples who have been separated for more than 12 months are not considered to be relatives of one another.

1051 This item inserts subparagraph 491(2)(a)(ia) into section 491 of the ITAA36 to mirror the effect of subparagraph 491(2)(a)(i) for couples in registered relationships, who are recognised as spouses because of the definition of 'spouse' inserted by Item 95 of this Schedule. The subparagraph provides that 'relative' includes a spouse of a person, other than a spouse within the meaning of paragraph (a) of the definition of spouse in subsection 995-1(1) of the ITAA97 who has been living separately and apart from the person and has been doing so for at least 12 months.

1052 Therefore, for the purposes of Part XI of the ITAA36, although a couple may be legally married or have a relationship certificate, a couple living separately and apart on a permanent basis are not treated as each other's spouse because of their being legally married or because they have a relationship certificate.

Item 43

1053 This item inserts a note at the end of subsection 491(2) of the ITAA36 to alert the reader to the possibility that section 960-255 of the ITAA97, which provides rules for determining when certain family relationships are recognised, may affect the meaning of 'brother' and 'sister', which are referred to in subsection 491(2).

1054 Section 960-255 is inserted by Item 90 of this Schedule.

Item 44

1055 Subparagraph 491(2)(b)(i) provides that for the purposes of Part XI of the ITAA36, the term 'relative' includes a child of a person, but not a step-child (unless it is living with the person). The ordinary meaning of the term 'step-child' only extends to the children of a married partner. However, children of both married and de facto partners are included in the definition of 'child' inserted by Item 91 of this Schedule. As a result, some children may be treated differently because of the marital status of their parents.

1056 This item repeals subparagraph 491(2)(b)(i) and substitutes a new subparagraph which provides that 'relative' includes a child, other than a child excluded under subsection (3) which is inserted by Item 45 of this Schedule. Subsection (3) excludes both step-children, and children who would have been step-children of a person except that the person is not legally married to his or her spouse. Under subparagraph 491(2)(b)(ii), those excluded children will still be treated as children of the person if they are living with him or her.

Item 45

1057 This item inserts a new subsection 491(3) into the ITAA36 in order to remove discrimination in subparagraph 491(2)(b)(i) of that Act, as described at Item 44 above.

Item 46

1058 This item amends subparagraphs 269-80(1)(c)(i) and (iii) of Schedule 2F to the ITAA36 as a consequence of the amendments made by Items 56 and 57 of this Schedule.

1059 The printer's note to this item indicates that the heading to section 269-80 of Schedule 2F to the ITAA36 is also altered as a consequence of those amendments.

Item 47 - 51

1060 These items amend paragraphs 269-95(2)(a), 269-95(2)(d), 269-95(2)(e), and 272-90(2A)(a) and sub-paragraphs 269-95(2)(b)(i), (ii), (c)(i) and (ii) and 269-95(3)(c)(ii) of Schedule 2F to the ITAA36 as a consequence of the amendments made by Items 56 and 57 of this Schedule.

Item 52

1061 Subsection 272-90(2A) of Schedule 2F to the ITAA36 provides that certain former family members are members of a person's family group in relation to conferral of a present entitlement to, or a distribution of, income or capital of a company, partnership or trust, upon or to the person. Paragraph 272-90(2A)(b) includes as a 'family member' for this purpose a person who was a widow or a widower of either the person, or a member of the person's family, and who is now a spouse of someone who is not member of the person's family. This paragraph does not extend to someone who was in a de facto relationship at the time of their partner's death, as the ordinary meaning of 'widow' and 'widower' only relates to married relationships.

1062 This item repeals paragraph 272-90(2A)(b) and inserts a new paragraph which includes as members of a person's family a spouse of the person or of a member of the person's family immediately before the death of the person or member of the person's family, and who is now the spouse of someone who is not a member of the person's family. This removes discrimination, as the term 'spouse' is defined by subsection 995-1(1) of the ITAA97 to include both married and de facto same-sex and opposite-sex relationships.

Item 53

1063 Paragraph 272-90(2A)(c) of Schedule 2F to the ITAA36 includes as a person's 'family member' for the purposes of subsection 272-90(2A) someone who was a step-child of the person or of a member of the person's family before a breakdown in the marriage of the person or the member of the person's family. As outlined in the Key Concepts and Definitions section of this EM, the ordinary meaning of 'step-child' only includes the children of a married partner.

1064 This item replaces the term 'step-child' with the term 'a child of the spouse of' in order to remove this discrimination between children on the basis of the marital status of their parents.

Item 54

1065 This item amends paragraph 272-90(2A)(c) of Schedule 2F to the ITAA36 as a consequence of the amendments made by Items 56 and 57 of this Schedule.

Item 55

1066 This item repeals the existing note to subsection 272-95(1) of Schedule 2F to the ITAA36 and inserts two new notes.

1067 The first note alerts the reader to the definitions of 'child', 'parent', and 'spouse' in subsection 6(1).

1068 The second note also alerts the reader to the possibility that section 960-255 of the ITAA97, which provides rules for determining when certain family relationships are recognised, may affect the meaning of the categories of relationships referred to in paragraph 272-95(1)(a). The second note is premised on the previous enactment of amendments to subsection 272-95(1) proposed by item 5 of Schedule 2 to Tax Laws Amendment (2008 Measures No. 4) Bill 2008. Section 960-255 is inserted by Item 90 of this Schedule.

Item 56

1069 This item repeals the definition of 'breakdown in the marriage' in subsection 272-140(1) of Schedule 2F to the ITAA36. This definition is replaced by a new definition of 'breakdown in the relationship' by Item 57 of this Schedule, to better reflect the fact that the definition applies equally to married couples and to de facto same-sex and opposite-sex couples.

Item 57

1070 This item inserts a definition of 'breakdown in the marriage or relationship' into subsection 272-140(1) of Schedule 2F to the ITAA36. The definition provides that there is a breakdown in the marriage or relationship of an individual if the individual is living with another individual in a genuine domestic relationship as a couple (whether the individuals are of the same or opposite sex, and whether legally married or not) and ceases to do so.

1071 For example, if a married couple separate, but do not divorce, the requirements of this definition will be satisfied notwithstanding the fact that they remain legally married. If a couple in a registered relationship cease to be in that relationship, but do not revoke their relationship registration, their relationship will also be considered to have broken down. However, if a couple continue to live together on a genuine domestic basis in a relationship as a couple, divorce or termination of relationship registration will not constitute a breakdown in the relationship. In such circumstances, the couple's relationship still exists, despite the change in the formal recognition of the relationship.

1072 This definition mirrors the requirements of the current definition of 'breakdown in the marriage' which is repealed by Item 56 of this Schedule, but removes discrimination against same-sex couples.

Item 58

1073 This item provides that the amendments to the ITAA36 made by this Schedule apply in relation to the 2009-2010 year of income (generally starting on 1 July 2009), and later years of income. This ensures that the amendments take effect in between the 2008-09 and 2009-10 income years, so that the provisions apply consistently throughout each separate income year.

Income Tax Assessment Act 1997

1074 This Act, together with the ITAA36, provides for the assessment of the amount of income tax taxpayers are liable to pay.

Item 59

1075 This item amends table item 3 in subsection 40-340(1) of the ITAA97 as a consequence of the amendments made by this Schedule to Subdivision 126-A of that Act.

Item 60

1076 This item amends paragraph 52-105(1)(a) of the ITAA97 to replace 'parent' with '*parent'. The asterisk marks the word as a defined term and its insertion in this case reflects the fact that Item 92 of this Schedule is adding a definition of 'parent'.

Item 61

1077 This item inserts a note at the end of subsection 70-100(10) of the ITAA97 to alert the reader to the possibility that section 960-255 of that Act, which provides rules for determining when certain family relationships are recognised, may affect the meaning of 'family' for the purposes of paragraph 70-100(10)(a).

1078 Section 960-255 is inserted by Item 90 of this Schedule.

Item 62

1079 This item amends subsection 100-10(3) of the ITAA97 as a consequence of the amendments made by this Schedule to Subdivision 126-A of that Act.

Item 63

1080 This item amends subsection 100-33(1) of the ITAA97 as a consequence of the amendments made by this Schedule to Subdivision 126-A of that Act.

Item 64

1081 This item amends table items 1, 2 and 7 of section 112-150 of the ITAA97 as a consequence of the amendments made by this Schedule to Subdivision 126-A of that Act.

Item 65

1082 This item amends the heading of section 118-75 of the ITAA97 as a consequence of the amendments made by this Schedule to Subdivision 126-A of that Act.

Item 66

1083 This item amends subsection 118-75 of the ITAA97 to replace 'marriage or de facto marriage' with 'relationship between *spouses' to reflect the change in the definition of 'spouse' made by Item 95 of this Schedule. This definition of spouse extends to married couples, and to same-sex and opposite-sex de facto couples.

Item 67

1084 This item amends subparagraph 118-75(1)(b)(i) of the ITAA97 to remove the asterisk before the term 'spouse' because it is the second occurrence of the term in the subsection. An asterisk is used to mark defined terms in the ITAA97 but a defined term is only marked the first time it appears in a sub-section.

Item 68

1085 This item amends paragraph 118-178(1)(c) of the ITAA97 as a consequence of the amendments made by this Schedule to Subdivision 126-A of that Act.

Item 69

1086 This item amends the heading to section 118-180 of the ITAA97 as a consequence of the amendments made by this Schedule to Subdivision 126-A of that Act.

Item 70

1087 This item amends the heading to Subdivision 126-A of the ITAA97 as a consequence of the amendments made by this Schedule to that Subdivision.

Item 71

1088 Section 126-5 of the ITAA97 provides a capital gains tax (CGT) roll-over in certain circumstances where assets are transferred from an individual to his or her spouse or former spouse under a court order relating to the breakdown of their relationship.

1089 Under the existing law, a CGT roll-over is available if there is a court order relating to the breakdown of a marriage or a de facto marriage (which only applies to relationships between a man and a woman).

1090 This item amends paragraph 126-5(1)(a) of the ITAA97 to cover transfers of assets because of a court order under the Family Law Act 1975 or under a State law, Territory law or foreign law relating to breakdowns in a relationship between spouses. That extends the provision to cover breakdowns in relationships - whether a marriage, or a same-sex or opposite-sex de facto relationship - because of the definition of 'spouse' inserted by Item 95 of this Schedule.

1091 The item also extends the provision to cover State laws or Territory laws relating to marriage breakdowns. Under the existing law, only court orders under a State law or Territory law relating to de facto marriages give rise to a CGT roll-over.

Item 72

1092 This item is a drafting change to clarify that the reference to 'that Act' in paragraph 126-5(1)(b) of the ITAA97 is to the Family Law Act as a result of the change to paragraph 126-5(1)(a) made by Item 71 of this Schedule.

Item 73

1093 This item repeals paragraph 126-5(1)(c) of the ITAA97, which is no longer necessary because of the change to paragraph 126-5(1)(a) made by Item 71 of this Schedule.

Item 74

1094 Section 126-5 of the ITAA97 provides a CGT roll-over in certain circumstances where assets are transferred from an individual to his or her spouse or former spouse as a result of the breakdown of their relationship.

1095 Under the existing law, a CGT roll-over is available if assets were transferred because of a written agreement that was binding because of a State law, Territory law or foreign law relating to de facto marriage breakdowns (but only of relationships between a man and a woman).

1096 This item amends subparagraph 126-5(1)(f)(i) of the ITAA97 to cover transfers of assets because of a written agreement that is binding under State law, Territory law or foreign law relating to breakdowns of relationships between spouses. That extends the provision to cover breakdowns in relationships - whether a marriage, or a same-sex or opposite-sex de facto relationship - because of the definition of 'spouse' inserted by Item 95 of this Schedule.

Item 75

1097 Section 126-15 of the ITAA97 provides a CGT roll-over if assets are transferred from a company or trustee under a court order relating to the breakdown of a marriage or a de facto marriage between a man and a woman.

1098 This item amends paragraph 126-15(1)(a) of the ITAA97 to cover transfers of assets because of a court order under the Family Law Act or under a State law, Territory or foreign law relating to breakdowns in a relationship between spouses. That extends the provision to cover breakdowns in relationships - whether a marriage, or a same-sex or opposite-sex de facto relationship - because of the definition of 'spouse' inserted by Item 95 of this Schedule.

1099 The item also extends the provision to cover State laws or Territory laws relating to marriage breakdowns. Under the existing law, only court orders under a State law or Territory law relating to de facto relationships give rise to a CGT roll-over.

Item 76

1100 This item is a drafting change to clarify that the reference to 'that Act' in paragraph 126-15(1)(b) of the ITAA97 is to the Family Law Act as a result of the change to paragraph 126-15(1)(a) made by Item 75 of this Schedule.

Item 77

1101 This item repeals paragraph 126-15(1)(c) of the ITAA97, which is no longer necessary because of the change to paragraph 126-15(1)(a) made by Item 75 of this Schedule.

Item 78

1102 Section 126-15 of the ITAA97 provides a CGT roll-over in certain circumstances where assets are transferred from a company or trustee as a result of the breakdown of a relationship.

1103 Under the existing law, a CGT roll-over is available if assets are transferred because of a written agreement that is binding because of a State law, Territory law or foreign law relating to de facto marriage breakdowns (but only of relationships between a man and a woman).

1104 This item amends subparagraph 126-15(1)(f)(i) of the ITAA97 to cover transfers of assets because of a written agreement that is binding under State law, Territory law or foreign law relating to breakdowns of relationships between spouses - whether a marriage, or a same-sex or opposite-sex de facto relationship - because of the definition of 'spouse' inserted by Item 95 of this Schedule.

Item 79

1105 This item amends paragraph 126-25(1)(b) of the ITAA97 to replace 'marriage or de facto marriage' with ' relationships between spouses or former spouses' to reflect the changes to subparagraphs 126-5(1)(f)(i) and 126-15(1)(f)(i) made by Items 74 and 78 of this Schedule.

Item 80

1106 This item repeals the words 'or a corresponding foreign law' in paragraph 126-140(2B)(b) of the ITAA97, which are no longer necessary because of the amendment to paragraph 126-140(2B)(c) made by Item 81.

Item 81

1107 Subsection 126-140(2A) of the ITAA97 provides a CGT roll-over in certain circumstances involving the transfer of an interest in a small superannuation fund under a court order relating to the breakdown of a relationship.

1108 Under the existing law, a CGT roll-over is available if the interest is transferred because of a court order made under a State law, Territory law or foreign law relating to de facto marriage breakdowns that corresponds to an order made under section 79, or subsections 90AE(2) or 90AF(2) of the Family Law Act. This only applies to relationships between a man and a woman.

1109 This item amends paragraph 126-140(2B)(c) of the ITAA97 to cover transfers of interests in small superannuation funds because of court orders made under a State law, Territory law or foreign law relating to breakdowns of relationships between spouses -whether a marriage, or a same-sex or opposite-sex de facto relationship - because of the definition of 'spouse' inserted by Item 95 of this Schedule.

Item 82

1110 Under the existing law, a CGT roll-over is also available under subsection 126-140(2A) of the ITAA97 if the interest is transferred because of a written agreement that is binding because of a State law, Territory law or foreign law relating to de facto marriage breakdowns (but only of relationships between a man and a woman).

1111 This item amends subparagraph 126-140(2B)(e)(i) of the ITAA97 to cover transfers of interests in small superannuation funds because of a written agreement that is binding under State law, Territory law or foreign law relating to breakdowns of relationships between spouses - whether a marriage, or a same-sex or opposite-sex de facto relationship - because of the definition of 'spouse' inserted by Item 95 of this Schedule.

Item 83

1112 Subsection 126-140(2C) of the ITAA97 provides conditions under which CGT events involving small superannuation funds are eligible for a roll-over because of a breakdown of a relationship. Under the existing law, the subsection applies to breakdowns of marriages and de facto marriages between a man and a woman.

1113 This item amends paragraph 126-140(2C)(b) of the ITAA97 to include transfers of assets directly connected with the breakdown of a relationship between spouses - whether a marriage, or a same-sex or opposite-sex de facto relationship - because of the definition of 'spouse' inserted by Item 95 of this Schedule.

Item 84

1114 This item amends table item 1 in subsection 149-30(3), and table item 1 in subsection 149-60(4), of the ITAA97 as a consequence of the amendments made to Subdivision 126-A by this Schedule.

Item 85

1115 This item replaces the heading to subsection 152-45(2) of the ITAA97 as a consequence of the amendments made to Subdivision 126-A by this Schedule.

Item 86

1116 This amends Note 2 to subsection 152-45(2) of the ITAA97 as a consequence of the amendments made to Subdivision 126-A by this Schedule.

Item 87

1117 This item amends section 152-100 of the ITAA97 as a consequence of the amendments made to Subdivision 126-A by this Schedule.

Item 88

1118 This item replaces the heading to subsection 152-45(2) of the ITAA97 as a consequence of the amendments made to Subdivision 126-A by this Schedule.

Item 89

1119 This item amends the note to subsection 152-115(2) of the ITAA97 as a consequence of the amendments made to Subdivision 126-A by this Schedule.

Item 90

1120 This item inserts Subdivision 960-J into the ITAA97 to define certain family relationships for the purposes of the tax legislation. The Subdivision ensures that all children within the definition of 'child' in subsection 995-1(1) of the ITAA97 are treated equally, regardless of the marital status of their parents or how they came into their parents' relationship.

1121 Section 960-252 sets out that the two objects of the Subdivision are:

-

to ensure that, where the Subdivision applies, the same consequences flow from the relationship two people have as an unmarried couple as from a marriage, if their relationship is registered in a State or Territory relationship register or if they live together on a genuine domestic basis, and

-

to ensure that where the Subdivision applies anyone who is defined to be an individual's child by section 995-1(1) is treated in the same way as if he or she were the individual's natural child.

1122 Section 960-255 makes provision for the recognition of the family relationships alluded to in section 960-252.

1123 Subsection 960-255(1) provides recognition to relationships traced through relationships between couples. If one individual is the spouse of another individual (as defined in subsection 995-1(1)), relationships traced to, from or through the individual, and family groups of which either individual is a member, are to be determined in the same way as if the individual were legally married to the other individual. For example, a couple living in a de facto relationship will be considered to be members of each other's family.

1124 Subsection 960-255(2) provides recognition to relationships involving children. If one individual is the child of another individual because of the definition in subsection 995-1(1), relationships traced to, from or through the individual, and family groups of which either individual is a member, are to be determined in the same way as if the individual were a natural child of the other individual. Subsection (2) thus recognises as relatives of a child the relatives of a person who is the parent of a child as a result of adoption, a step-relationship, or because the child is the product of a relationship the person had as a couple with another person.

1125 Subsection 960-255(3) provides that subsections (1) and (2) apply for the purposes of the Act, and for the purposes of a provision of any other Act if one or more of the following definitions in subsection 995-1(1) of the ITAA97 applies for the purposes of that provision (or would apply if it were used in the provision):

-

The definition of 'child'

-

The definition of 'parent', or

-

The definition of 'relative'.

1126 The effect of the subsection is that the provisions of Subdivision 960-J will apply in certain other tax laws, including the ITAA36 and the FBT Assessment Act. It is not necessary for the provision in the other Act to actually mention 'child', 'parent' or 'relative'. It is enough that, had it mentioned that term, it would have taken the meaning given it by the ITAA97.

Item 91

1127 'Child' of a person is currently defined in subsection 995-1(1) of the ITAA97 to expand the person's adopted child, step-child, or ex-nuptial child. However, this definition does not necessarily recognise the children of the person's same-sex relationships. It also does not recognise the children of a person's de facto partner (because a person's 'step-children' only include the children of the person's spouse by marriage).

1128 To ensure that children are not treated differently because of their parents' marital status, this item repeals the existing definition of 'child' in subsection 995-1(1) and replaces it with a new definition. The new definition preserves the existing categories of recognised children in paragraph (a).

1129 Paragraph (b) provides that 'child' includes a child of an individual's spouse. This ensures that the children of a person's married or de facto partner are recognised equally.

1130 Paragraph (c) provides recognition to children of same-sex relationships by providing that someone who is the product of a relationship a person has or had as a couple with another individual (whether of the same or a different sex) is a person's child. A person cannot be a product of a relationship unless they are biologically related to at least one of the people in that relationship, or are born to a woman in the relationship. This definition draws on elements of the key definition of 'child'. A description of this key definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 92

1131 This item inserts a definition of 'parent' into subsection 995-1(1) of the ITAA97. The definition provides that someone is the parent of anyone who is their 'child' (as amended by Item 91 of this Schedule). This definition draws on the general approach to the definition of 'parent' in this Bill, a description of which can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 93

1132 The asterisk marks the word as a defined term and its insertion in this case reflects the fact that Item 92 of this Schedule is adding a definition of 'parent'.

Item 94

1133 This item inserts a note at the end of the definition of 'relative' in subsection 995-1(1) of the ITAA97 to alert the reader to the possibility that section 960-255 of that Act, which provides rules for determining when certain family relationships are recognised, may affect the meaning of the categories of relationships referred to in paragraph (b) of the definition.

1134 Section 960-255 is inserted by Item 90 of this Schedule.

Item 95

1135 Spouse is currently defined in subsection 995-1(1) of the ITAA97 to include a person who, although not legally married to the person, lives with the person on a genuine domestic basis as the person's husband or wife. This definition extends to both married couples and opposite-sex de facto couples, but does not extend to same-sex de facto couples.

1136 This item repeals the definition of 'spouse' and inserts a new definition. The definition expands the ordinary meaning of 'spouse' to include:

-

another individual (whether of the same or opposite sex) with whom the individual is in a relationship that is registered under a State or Territory law prescribed for the purposes of subsection 22B of the Acts Interpretation Act as a kind of relationship prescribed for the purposes of that subsection, and

-

another individual who, although not legally married to the individual, lives with the individual on a genuine domestic basis in a relationship as a couple.

1137 This definition extends to married couples, and to same-sex and opposite-sex de facto couples. The definition incorporates elements of the definition of 'de facto partner', which is described in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 96

1138 This item provides that the amendments to the ITAA97 made by this Schedule apply in relation to the 2009-2010 income year (generally starting on 1 July 2009) and later income years.

1139 To the extent to which amendments affect the FBT Assessment Act, the amendments in the Schedule apply in relation to the FBT year starting on 1 April 2009 and later FBT years.

Part 2-Amendment of market regulation laws

1140 This Part contains amendments to the Financial Sector (Shareholdings) Act 1998 , the Foreign Acquisitions and Takeovers Act 1975 , the Insurance Acquisitions and Takeovers Act 1991 and the Life Insurance Act 1995 .

1141 The amendments to the Financial Sector (Shareholdings) Act, Foreign Acquisitions and Takeovers Act and Insurance Acquisitions and Takeovers Act will result in a broadened definition of 'associate' in each of these Acts. As a result, same-sex partners and their children will be subject to the same statutory limits as opposite-sex partners, their children and other relatives.

1142 The amendments to the Life Insurance Act will enable life insurers to make payments under certain types of life policies to the de facto partners and children of deceased persons, and protect the life policies of de facto partners of bankrupt individuals.

Financial Sector (Shareholdings) Act 1998

1143 The Financial Sector (Shareholdings) Act Act enables the government to regulate merger and acquisition activities concerning financial sector companies to ensure the financial health of the companies is not adversely affected as a result of these activities, and to encourage widespread ownership in the financial sector.

1144 Under the Financial Sector (Shareholdings) Act, a person needs the Minister's consent to hold a stake of more than 15 per cent in a financial sector company or to have 'practical control' of the company. Consent will only be given if the proposed transaction satisfies a 'national interest' test.

1145 Under Part 2 of the Financial Sector (Shareholdings) Act, the term 'associate' is used to determine a person's stake in a financial sector company (which includes shareholdings of the person's associates), or whether a person has practical control of a financial sector company (which includes the control or influence of the person's associates).

1146 Under the current clause 4 of Schedule 1 of the Act, the term 'associate' includes a 'relative' of the person. Under the current clause 2 of Schedule 1 of the Financial Sector (Shareholdings) Act, the term 'relative' is defined to include the person's spouse, parent, son or daughter.

Item 97

1147 This item amends clause 2 of Schedule 1 to the Financial Sector (Shareholdings) Act as a consequence of the insertion of subclause (2) by Item 103 of this Schedule.

Item 98

1148 This item inserts the key definition of 'child' into clause 2 of Schedule 1 of the Financial Sector (Shareholdings) Act. A description of this definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 99

1149 This item inserts the key definition of 'parent' into clause 2 of Schedule 1 of the Financial Sector (Shareholdings) Act. A description of this definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 100

1150 Paragraph (b) of the definition of 'relative' in clause 2 of Schedule 1 of the Financial Sector (Shareholdings) Act provides that a 'relative' includes another person who, although not legally married to the person, lives with the person on a bona fide domestic basis as the husband or wife of the person. This definition extends to married couples, and to opposite-sex de facto couples, but does not extend to same-sex de facto couples because of the words 'as the husband or wife'.

1151 This item repeals paragraph (b), and substitutes a paragraph referring to a de facto partner within the meaning of the key definition of 'de facto partner' in the Acts Interpretation Act. A description of the definition of 'de facto partner' can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 101

1152 Paragraph (d) of the definition of 'relative' in clause 2 of Schedule 1 of the Financial Sector (Shareholdings) Act provides that 'relative' includes a son, daughter, or remoter issue of a person. The ordinary meaning of the terms 'son' and 'daughter' extend only to natural children.

1153 In order to recognise the children of same-sex couples, this item omits the words 'son, daughter' from paragraph (d) the definition of 'relative' and replaces them with the term 'child'. This amendment makes it clear that the provision applies to children of a person because of the definition of 'child' in section 4 of the Act, inserted by Item 98 of this Schedule.

Item 102

1154 This item inserts a note at the end of the definition of 'relative' in clause 2 of Schedule 1 of the Financial Sector (Shareholdings) Act to alert the reader to the possibility that subclause 2(2), which provides a tracing rule for determining when certain family relationships are recognised, may affect the categories of relationship referred to in this definition. Subclause 2(2) is inserted by Item 103 of this Schedule.

Item 103

1155 This item inserts subclause 2(2) into clause 2 of Schedule 1 of the Financial Sector (Shareholdings) Act which provides a tracing rule in order to recognise certain family relationships. The subsection provides that if one person is the child of another person because of the definition of 'child' in subclause 2(1), that relationships traced to or through that person are to be determined on the basis that the person is the child of the other person.

1156 A description of the tracing rule can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 104

1157 This item provides a transitional period of 6 months from when the amendments commence before the statutory limits affected by these amendments apply. Individuals who are affected by the amended definition of 'associate' may rearrange their affairs during this period or obtain the Minister's consent to continue to have specific levels of shareholding in financial sector companies. The item also removes any associated declaration-making powers of the Treasurer under the Financial Sector (Shareholdings) Act in relation to such persons in such circumstances for the same period of time.

Foreign Acquisitions and Takeovers Act 1975

1158 The Foreign Acquisitions and Takeovers Act and the Foreign Acquisitions and Takeovers Regulations 1989 (the Regulations) provide legislative support for the Government's foreign investment policy. The Foreign Acquisitions and Takeovers Act empowers the Treasurer to examine proposals by foreign persons to acquire a substantial or controlling interest in the business assets of a prescribed Australian corporation valued above a specified threshold or to acquire an interest in Australian urban land. The Foreign Acquisitions and Takeovers Act empowers the Treasurer to prohibit a proposal that he or she decides to be contrary to the national interest.

1159 Under the terms of the Foreign Acquisitions and Takeovers Act if a foreign person alone or together with any associate or associates is in a position to control not less than 15 per cent of the voting power or issued shares of a corporation they are subject to the Foreign Acquisitions and Takeovers Act and required to seek approval from the Treasurer for any acquisition beyond this level.

Item 105

1160 This item inserts a definition of 'child' into subsection 5(1) of the Foreign Acquisitions and Takeovers Act which refers to the definition inserted into subsection 6(2) of that Act by Item 110 of this Schedule.

Item 106

1161 This item inserts a definition of 'parent' into subsection 5(1) of the Foreign Acquisitions and Takeovers Act which refers to the definition inserted into subsection 6(2) of that Act by Item 110 of this Schedule.

Item 107

1162 This item amends section 6 of the Foreign Acquisitions and Takeovers Act as a consequence of the insertion of subsection 6(2) by Item 110 of this Schedule.

Item 108

1163 Section 6 of the Foreign Acquisitions and Takeovers Act provides for the categories of person who are taken to be the associates of a person for the purposes of the Foreign Acquisitions and Takeovers Act. Paragraph (a) of the definition currently refers to a 'spouse' of the person. 'Spouse' is undefined in the Foreign Acquisitions and Takeovers Act, and therefore takes its ordinary meaning, which does not extend to same and opposite-sex de facto couples.

1164 This item amends paragraph 6(a) to apply to de facto partners (within the meaning of the Acts Interpretation Act) as well as spouses. This removes marital status discrimination against opposite-sex partners, as well as recognising same-sex relationships.

Item 109

1165 Paragraph 6(a) of the definition of 'associate' in the Foreign Acquisitions and Takeovers Act provides that 'associate' includes a son or daughter of a person. The ordinary meaning of the terms 'son' and 'daughter' do not extend to the children of same-sex couples.

1166 In order to recognise the children of same-sex couples, this item omits the words 'son, daughter' from paragraph (a) of the definition of 'relative' and replaces them with the term 'child'. This amendment makes it clear that the provision applies to children of a person within the definition of 'child' in subsection 6(2) of the Foreign Acquisitions and Takeovers Act, inserted by Item 110 of this Schedule.

Item 110

1167 This item inserts definitions of 'child' and 'parent' into subsection 6(2) of the Foreign Acquisitions and Takeovers Act, and inserts a tracing rule as subsection 6(3) in order to recognise certain family relationships.

1168 Subsection 6(2) applies the key definitions of 'child' and 'parent' in the Foreign Acquisitions and Takeovers Act.

1169 Subsection 6(3) provides a 'tracing rule' to allow certain relationships traced through same-sex relationships to be recognised. The subsection provides that if one person is the child of another person because of the definition of 'child' in subsection 6(2), that relationships traced to or through that person are to be determined on the basis that the person is the child of the other person.

1170 A description of the key definitions of 'child' and 'parent', and of the tracing rule can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 111

1171 This item provides a transitional period of six months from the commencement of the amendments before the new statutory limits come into effect. People who were not previously determined to be associates under section 6, but who will become associates as a result of the amendments to the Foreign Acquisitions and Takeovers Act by this Schedule, will not be subject to the proposed changes for a period of six months from commencement. The item also removes any associated order making powers of the Treasurer under the Foreign Acquisitions and Takeovers Act in relation to such persons in such circumstances for the same period of time.

Insurance Acquisitions and Takeovers Act 1991

1172 The Insurance Acquisitions and Takeovers Act enables the Government to regulate merger and acquisition activities concerning insurance companies to ensure that the financial health of these companies is not adversely affected as a result of such activities and to encourage widespread ownership in the sector.

1173 Under the Insurance Acquisitions and Takeovers Act, a person needs the Minister's consent to acquire or lease assets, liabilities and other rights and interests in a registered insurance company, or enter agreements relating to directors of a registered insurance company. Consent will only be given if the proposed transaction is not contrary to the public interest.

1174 The term 'associate' is used in the Insurance Acquisitions and Takeovers Act to determine the level of a person's acquisition in relation to an insurance company (which includes the acquisitions of the person's associates), or a person's influence over directors of an insurance company (which includes the influence or control of the person's associates).

1175 Under the Insurance Acquisitions and Takeovers Act, the term 'associate' is defined in section 7 as including a person's 'relative'. Currently, the term 'relative' is defined in section 4 as including the person's spouse, parent, son or daughter.

Item 112

1176 This item amends section 4 of the Insurance Acquisitions and Takeovers Act as a consequence of the insertion of subsection (2) by Item 118 of this Schedule.

Item 113

1177 This item inserts the key definition of 'child' into section 4 of the Insurance Acquisitions and Takeovers Act. A description of this definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 114

1178 This item inserts the key definition of 'parent' into section 4 of the Insurance Acquisitions and Takeovers Act. A description of this definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 115

1179 Paragraph (b) of the definition of 'relative' in section 4 of the Insurance Acquisitions and Takeovers Act provides that a 'relative' includes another person who, although not legally married to the person, lives with the person on a bona fide domestic basis as the husband or wife of the person. This definition extends to married couples, and to opposite-sex de facto couples, but does not extend to same-sex de facto couples because of the words 'as the husband or wife'.

1180 This item repeals paragraph (b), and substitutes a paragraph referring to a de facto partner within the meaning of the key definition of 'de facto partner' in the Acts Interpretation Act. A description of the definition of 'de facto partner' can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 116

1181 Paragraph (d) of the definition of 'relative' in the Insurance Acquisitions and Takeovers Act provides that 'relative' includes a son, daughter, or remoter issue of a person. The ordinary meaning of the terms 'son' and 'daughter' do not extend to the children of same-sex couples.

1182 In order to recognise the children of same-sex couples, this item omits the words 'son, daughter' from paragraph (d) of the definition of 'relative' and replaces them with the term 'child'. This amendment makes it clear that the provision applies to children of a person within the definition of 'child' in section 4 of the Insurance Acquisitions and Takeovers Act, inserted by Item 113 of this Schedule.

Item 117

1183 This item inserts a note at the end of the definition of 'relative' in section 4 of the Insurance Acquisitions and Takeovers Act to alert the reader to the possibility that subsection 4(2), which provides a tracing rule for determining when certain family relationships are recognised, may affect the categories of relationship referred to in this definition. Subsection 4(2) is inserted by Item 118 of this Schedule.

Item 118

1184 This item inserts subsection 4(2) into the Insurance Acquisitions and Takeovers Act to provide a tracing rule in order to recognise certain family relationships. The subsection provides that if one person is the child of another person because of the definition of 'child' in subsection 4(1), that relationships traced to or through that person are to be determined on the basis that the person is the child of the other person.

1185 A description of the tracing rule can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 119

1186 This item provides a transitional period of six months from the commencement of the amendments before the new statutory limits come into effect. People who were not previously determined to be associates under section 6, but who will become associates as a result of the amendments to the Insurance Acquisitions and Takeovers Act by this Schedule, will not be subject to the proposed changes for a period of six months from commencement. At the end of this period, affected individuals would be required to obtain the Minister's go-ahead decision before entering a 'trigger proposal'.

Life Insurance Act 1995

1187 The Life Insurance Act protects the interests of the owners and prospective owners of life insurance policies in a manner consistent with the continued development of a viable, competitive and innovative life insurance industry. It also protects the interests of persons entitled to other kinds of benefits provided in the course of carrying on life insurance business.

Item 120

1188 Section 204 of the Life Insurance Act provides that the rights or interests of a person under his or her life policy, or a life insurance policy of his or her spouse, is not liable to be used in discharging a debt owed by the person. This provision is subject to the Bankruptcy Act 1966 .

1189 Paragraph 204(1)(b) presently refers only to a person's 'spouse'. Spouse is defined in the Schedule to the Life Insurance Act to include another person who, although not legally married to the person, lives with the person on a genuine domestic basis as the husband or wife of the person. The reference to living as a 'husband or wife' of the person in this definition means that same-sex de facto couples are not covered by the definition.

1190 This item inserts the words 'or de facto partner' after 'spouse' in paragraph 204(1)(b) in order to allow same-sex couples to enjoy the protection afforded by this provision. A definition of 'de facto partner' is inserted by Item 126 of this Schedule.

Item 121

1191 Section 211 of the Life Insurance Act currently allows an insurance company to make payment under a single life policy to the spouse, father, mother or other relatives of the deceased, without requiring a letter of probate or administration, where the amount payable under the life policy is under $50,000.

1192 Paragraph 211(1)(c) presently refers only to a person's 'spouse'. Spouse is defined in the Schedule to the Act to include another person who, although not legally married to the person, lives with the person on a genuine domestic basis as the husband or wife of the person. The reference to living as a 'husband or wife' of the person in this definition means that same-sex de facto couples are not covered by the definition.

1193 In addition, the reference to 'father' and 'mother' may not extend to people who are parents because of the definition of 'parent' inserted into the Schedule to the Life Insurance Act by Item 127 of this Schedule.

1194 This item inserts the words 'or de facto partner' after 'spouse' in paragraph 211(1)(c) in order to allow same-sex couples equal treatment. A definition of 'de facto partner' is inserted by Item 126 of this Schedule. The item replaces the terms 'father, mother' with 'parent' in order to make it clear that the provision extends to people who are parents because of the definition of 'parent' inserted by Item 127 of this Schedule.

Item 122

1195 This item inserts subsection 211(1A) into the Life Insurance Act which provides a tracing rule in order to recognise certain family relationships referred to in paragraph 211(1)(c). The subsection provides that if one person is the child of another person because of the definition of 'child' in the Life Insurance Act, that relationships traced to or through that person are to be determined on the basis that the person is the child of the other person.

1196 A description of the tracing rule can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

1197 Under the amendments made by Items 121 and 122 of this Schedule, life insurance companies would be permitted to make payments to the same-sex partner of a deceased person or their children where the total amount payable is under $50,000.

Item 123

1198 Section 212 of the Life Insurance Act currently allows an insurance company to make payment under two or more life policies to the spouse, father, mother or other relatives of the deceased, without requiring a letter of probate or administration, where the amount payable under the life policies is under $50,000.

1199 Paragraph 212(1)(c) presently refers only to a person's 'spouse'. Spouse is defined in the Schedule to the Life Insurance Act to include another person who, although not legally married to the person, lives with the person on a genuine domestic basis as the husband or wife of the person. The reference to living as a 'husband or wife' of the person in this definition means that same-sex de facto couples are not covered by the definition.

1200 In addition, the reference to 'father' and 'mother' may not extend to people who are parents because of the definition of 'parent' inserted into the Schedule to the Life Insurance Act by Item 127 of this Schedule.

1201 This item inserts the words 'or de facto partner' after 'spouse' in paragraph 212(1)(c) in order to allow same-sex couples equal treatment. A definition of 'de facto partner' is inserted by Item 126 of this Schedule. The item replaces the terms 'father, mother' with 'parent' in order to make it clear that the provision extends to people who are parents because of the definition of 'parent' inserted by Item 127 of this Schedule.

Item 124

1202 This item inserts subsection 212(1A) into the Life Insurance Act which provides a tracing rule in order to recognise certain family relationships referred to in paragraph 212(1)(c). The subsection provides that if one person is the child of another person because of the definition of 'child' in the Act, that relationships traced to or through that person are to be determined on the basis that the person is the child of the other person.

1203 A description of the tracing rule can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

1204 Under the amendments made by Items 123 and 124 of this Schedule, life insurance companies would be permitted to make payment under two or more life policies to the same-sex partner of a deceased person or their children where the total amount payable is under $50,000.

Item 125

1205 This item inserts the key definition of 'child' into the Schedule to the Life Insurance Act. A description of this definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 126

1206 This item inserts a definition of 'de facto partner' into the Schedule to the Life Insurance Act, which provides that a 'de facto partner' includes a de facto partner within the meaning of the key definition of 'de facto partner' in the Acts Interpretation Act. A description of the definition of 'de facto partner' can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 127

1207 This item inserts the key definition of 'parent' into the Schedule to the Life Insurance Act. A description of this definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 128

1208 'Spouse' is defined in the Schedule to the Life Insurance Act in relation to an individual as including another person who, although not legally married to the individual, lives with the individual on a genuine domestic basis as the husband or wife of the person. This definition extends to married couples, and to opposite-sex de facto couples, but does not extend to same-sex de facto couples because of the words 'as the husband or wife'.

1209 Item 126 of this Schedule inserts a definition of 'de facto partner' which extends to both same and opposite-sex de facto couples. As a consequence, the definition of 'spouse' is no longer necessary, and is repealed by this item.

Item 129

1210 This item would specify that the amendments to sections 211 and 212 of the Life Insurance Act would only apply to the life policies of individuals who die on or after the date of royal assent. It clarifies whether the life insurance companies would be permitted to make payment under certain life policies to the same-sex partner of a deceased person or their children.

Part 3-Amendment of the Corporations Act 2001

1211 This Part contains proposed amendments to the Corporations Act 2001 . The amendments will remove differential treatment of same-sex couples from the Corporations Act.

1212 In general, the amendments will place further restrictions on the range of people who can receive benefits from companies. They will also expand the group of people from whom such benefits, or assets, can be clawed back in an insolvency. The Bill will also impact on when a financial services or market licence may be granted and the obligations of licensees. The most notable amendment to the Corporations Act is to the definition of 'spouse'. That definition will be amended to include a de facto partner within the meaning of the Acts Interpretation Act, and as such, will include same-sex partners. As a consequence of this amendment, the definitions of 'child' and 'parent' will also be altered and a new provision will be inserted to clarify what is to be considered a relationship.

Corporations Act 2001

1213 This Act forms part of a national regulatory framework for corporations and the securities and futures sectors in Australia. Specifically, it provides regulation for bodies including companies incorporated in Australia, foreign bodies corporate carrying on business in Australia, securities exchanges, and, in some instances, unincorporated bodies, cooperative societies and incorporated associations. It also regulates people including auditors, liquidators, receivers and managers, promoters of companies, company officers, and people dealing with securities or corporations.

Item 130

1214 This item inserts the key definition of 'child' into section 9 of the Corporations Act. A description of this definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Items 131, 132, 134, 136 - 141

1215 These items amend the following definitions in section 9 of the Corporations Act as a consequence of the insertion of a definition of 'spouse' in section 9 by Item 143 of this Schedule:

-

'close associate'

-

'immediate family member', and

-

'related entity'.

Item 133

1216 This item repeals the definition of 'de facto spouse' in section 9 of the Corporations Act as a consequence of the definition of 'spouse' in section 9 inserted by Item 143 of this Schedule.

Item 135

1217 This item inserts the key definition of 'parent' into section 9 of the Corporations Act. A description of this definition can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 142

1218 This item omits the words 'son, daughter' from the definition of 'relative' in section 9 of the Corporations Act and replaces them with the term 'child'. This amendment makes it clear that the provision applies to children of a person because of the definition of 'child' in section 9 of the Corporations Act, inserted by Item 130 of this Schedule.

Item 143

1219 This item inserts a definition of 'spouse' into section 9 of the Corporations Act. The definition provides that a 'spouse' includes a de facto partner of the person within the meaning of the key definition of 'de facto partner' in the Acts Interpretation Act. A description of the definition of 'de facto partner' can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

Item 144

1220 This item inserts section 9AA into the Corporations Act which provides a tracing rule in order to recognise certain family relationships. A description of the tracing rule can be found in the Key Concepts and Definitions section of this Explanatory Memorandum.

1221 Section 9AA provides that, for the purposes of the Corporations Act, relationships include:

-

relationships between de facto partners (within the meaning of the Acts Interpretation Act)

-

relationships of child and parent that arise if someone is an exnuptial or adoptive child of a person, or if someone is the child of a person because of the definition of 'child' in section 9 of the Corporations Act, and

-

relationships traced through these two types of relationships.

Item 145

1222 Section 228 of the Corporations Act provides a definition of 'related parties' in relation to public companies. This item amends paragraph 228(2)(d) of this definition to omit the words 'and de facto spouses' as a consequence of the insertion of a definition of 'spouse' in section 9 of the Corporations Act which includes de facto partners.

Item 146

1223 Subsection 440J(1) provides that during the administration of a company a guarantee of liability cannot be enforced as against a director of a company, or a spouse, de facto spouse or relative of such a director, except with the leave of the Court and according to such terms as the Court imposes.

1224 This item amends subparagraph 440J(1)(a)(ii) of the Corporations Act to omit the words 'and de facto spouses' as a consequence of the insertion of a definition of 'spouse' in section 9 of the Corporations Act which includes de facto partners.

Item 147

1225 This item amends paragraph 440J(1)(b) of the Corporations Act to omit the words 'and de facto spouses' as a consequence of the insertion of a definition of 'spouse' in section 9 of the Corporations Act which includes de facto partners.

Item 148

1226 This item repeals the definition of 'spouse' in subsection 556(2) of the Corporations Act as a consequence of the insertion of a definition of 'spouse' into section 9 of the Corporations Act by Item 143 of this Schedule.

Item 149

1227 This item amends paragraph 601JA(2)(f) of the Corporations Act to omit the words 'and de facto spouses' as a consequence of the insertion of a definition of 'spouse' in section 9 of the Corporations Act which includes de facto partners.

Item 150

1228 This item amends paragraph 601JB(2)(e) of the Corporations Act to omit the words 'and de facto spouses' as a consequence of the insertion of a definition of 'spouse' in section 9 of the Corporations Act which includes de facto partners.