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Tax Laws Amendment (2006 Measures No. 2) Bill 2006
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Main Provisions
Endnotes
Contact Officer & Copyright Details
Tax Laws Amendment (2006 Measures No. 2) Bill 2006
Date introduced:
House: House of Representatives
Portfolio: Treasury
Commencement:
Some items commenced on the day the Act received
Royal Assent (
This is an omnibus Bill which amends
various taxation laws. The Bill was passed in the Senate on
The Bill includes seven unrelated Schedules which make amendments to various taxation acts. The amendments are briefly outlined below. Further information can be found in the Explanatory Memorandum.(1)
Schedule 1 amends the Income Tax Assessment Act 1997 (ITAA 1997) to ensure that ex-gratia lump sum payments made to personnel involved in the F-111 Deseal/Reseal program are exempt from income tax.
This schedule attracted the most comment during debate in the House and Senate. Under the F-111 Deseal/Reseal Ex-gratia Lump Sum Payment program, service and civilian personnel who were exposed to chemicals while working on the F-111 deseal/reseal project receive a payment of either $10,000 or $40,000. The government has not accepted any liability for health complaints associated with work on the program. In his Second Reading speech the Assistant Treasurer stated:
The government is making the one-off ex gratia lump sum payments from the 2005-06 income year to certain personnel who experienced a unique working environment in the maintenance of F111 aircraft fuel tanks.
The payments are made in recognition of the difficulties eligible personnel suffered in the environment in which they worked, regardless of whether there is evidence of any adverse health impacts from that work environment.(2)
Clearly there is no price that can be placed on one’s health and wellbeing. Whilst I appreciate, to an extent, the government’s attempt to address the harm caused to a number of Department of Defence employees in the course of their duty, I must also condemn their corporate style ‘admit no liability’ approach to this matter. Advice from the F-111 Deseal/Reseal Support Group indicates that the amounts in question are insufficient to help people battling illnesses due to chemical exposure.(3)
Schedule 2 amends ITAA 1997 to add two new organisations
to the list of Deductible Gift Recipients (DGRs). Donations made to
DGRs are eligible as a tax deduction for individual tax payers. The
two organisations added are Playgroup Victoria Inc. and
This Schedule also amends the ITAA 1997 to correct
some unintended consequences from the rewrite of the Capital Gains Tax
provisions which were part of the Tax Law Improvement Project. The amendments
restore the law to ensure that it operates as intended and as it previously
applied under the ITAA 1936.
…a reminder that these acts are so complicated that, even when the experts draft the changes, some years later problems and difficulties can be discovered.(4)
Schedule 4 amends the ITAA 1997 to extend the circumstances
in which a taxpayer may choose to obtain a capital gains tax roll-over
when an asset is compulsorily acquired. The amendments are backdated
to apply to compulsory acquisitions dating after
The Explanatory Memorandum states that the financial implications of this amendment are unquantifiable. While an initial impact of $5million per annum is forecast, the Explanatory Memorandum notes that there is expected to be a much larger cost in 2005-06 due to the retrospective start date of the measure, and the fact that the amendments favour the taxpayer in all cases.(6)
Schedule 5 amends the ITAA 1997 to limit the circumstances in which the franking deficit tax offset is reduced, applying from 1 July 2002 onwards (that is, from the commencement of the simplified imputation system).
Schedule 6 amends the Superannuation Guarantee (Administration) Act 1992 to extend the right to choose a superannuation fund to employees whose superannuation arrangements are determined by state laws. The amendments ensure that employers are not required to make superannuation guarantee contributions to a fund specified in state law, as well as to an employee’s chosen fund. In the second reading speech the Assistant Treasurer stated: