House of Representatives

Second Reading Speech

Mr Slipper (Parliamentary Secretary to the Minister for Finance and Administration)

I move:

That this bill be now read a second time.

This bill amends the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997 and the A New Tax System (Goods and Services Transition) Act 1999, to give effect to several taxation measures.

Firstly, the interest withholding tax amendments contained in this bill are aimed at enhancing Australia's development as a centre for financial services in the Asia-Pacific region. These amendments will extend the categories of exemption from interest withholding tax to improve Australia's capital markets by removing some impediments to Australian businesses raising finance and eliminating certain compliance costs.

Among those who will potentially benefit from the amendments are those who issue debentures which may be taken up by Australian businesses in the course of business or acting in their capacity as clearing house, and Australian residents who purchase qualifying discounted securities from non-residents.

Secondly, the bill contains a measure that provides a capital gains tax exemption for Australian residents who receive payments under a German wartime compensation fund known as the German Forced Labour Compensation Program.

The exempt payments are made to Australian residents and their heirs who suffered injustices and loss during the National Socialist period - for example, slave or forced labourers - and those who suffered property damage or loss.

The measure satisfies an election commitment made by the government during the 2001 federal election campaign.

Lastly, this bill amends the income tax law so that, from 1 January 2003, friendly societies will be allowed a deduction for investment income paid to recipients of income from special purpose investment products - that is, income bonds, scholarship plans and funeral policies. The deduction, which will apply to products issued on or after 1 January 2003, is to prevent double taxation in the situation where the income, following recent business tax reforms, is assessable income of the friendly society.

It will mean that the income is not taxed in the hands of both the friendly society and the investor or beneficiary. The bill also clarifies the taxation treatment of distributions paid from special purpose investment products.

Full details of the measures contained in this bill are included in the explanatory memorandum. I commend this bill to the House and I present the explanatory memorandum.

Debate (on motion by Mr Albanese) adjourned.