House of Representatives

Second Reading

Mr Miles (Braddon--Parliamentary Secretary (Cabinet) to the Prime Minister) (6.29 p.m.)--I move:

That the Bill be now read a second time.

This Bill will amend some aspects of the taxation laws in relation to family tax assistance. The changes are technical in nature, to ensure that family tax assist ance is properly delivered to the people who are intended to benefit from the measures.

The amendments will correct some anomalies in the way the law currently works. Firstly, taxpayers with primary production income and a special income component, such as a capital gain, will be able to reduce the rate of complementary tax--if any--by an amount representing family tax assistance, in circumstances where family tax assistance benefits exceed the ordinary tax liability. This will put these taxpayers in the same position as other taxpayers who are liable to pay complementary tax.

Secondly, in the existing law, entitlement to family tax assistance increases the rate of further tax on uncontrolled partnership income. The law will be amended to ensure this is no longer the case.

Thirdly, the complementary tax provisions in relation to family tax assistance will be adjusted for taxpayers with reduced tax- free thresholds--such as new residents and full-time students entering the work force for the first time. Currently, these taxpayers are disadvantaged because the provisions are based on the normal tax-free threshold of $5,400.

The Bill also contains a number of technical corrections. These amendments will apply from 1 January 1997. Full details of the measures in the Bill are contained in the Explanatory Memorandum circulated to honourable members.

I commend the Bill to the House.