The Government today introduced Tax Laws Amendment (2008 Measures No. 1) Bill 2008 to implement a number of improvements to Australia's taxation system, including the following:
Superannuation Lump Sums Paid to the Terminally Ill
The Bill will ensure that superannuation lump sum payments that are paid to a persons suffering from a terminal medical condition will be tax free.
The details of new conditions of release will be provided following the passage of this Bill.
The Rudd Government has brought forward the date of effect for the measure so that it applies to payments made on or after 1 July 2007 rather than the 12 September 2007 that was originally announced by the former government.
Tax Deductibility for Trees Established in Carbon Sink Forests
This measure will encourage the establishment of carbon sink forests and highlights the Government's commitment to addressing climate change.
Under the changes the establishment costs will be immediately deductible for trees established in carbon sink forests in the 2007-08 to 2011-12 income years inclusive. After this initial period, establishment costs will be deductible over 14 years and 105 days at a rate of 7 per cent per annum.
To be eligible for the deduction, the taxpayer must be carrying on a business and the carbon sink forest must meet Environmental and Natural Resource Management Guidelines.
Political Donations
The Government will remove the tax deductibility of political donations made on or after 1 July 2008 in line with its election commitment.
The Government is repealing the specific deduction provisions in Division 30 of the Income Tax Assessment Act 1997, which currently allow deductions for contributions and gifts to political parties and to independent candidates and independent members up to a maximum of $1,500.
In addition, to ensure that a deduction is not available, these amendments also remove general deductions for business taxpayers for contributions and gifts to political parties, members and candidates.
This measure will save $31.4 million over three years from 2009-10, and is part of the Government's savings strategy.
Equine Workers Hardship Wage Supplement
The legislation will extend the beneficiary tax offset to the Supplement so that no tax is payable if the only income received by the recipient is the Supplement.
The tax treatment will be consistent with the treatment of other income support such as Newstart Allowance and will apply to payments of the Supplement made during the 2007-08 income year and later income years.
Tobacco Industry Exit Grants
The Bill ensures that tobacco growers who undertake to exit all agricultural enterprises for at least five years will receive grants under the Tobacco Growers Adjustment Assistance Programme tax-free.
This measure will apply to payments made in the 2006-07 and later income years.
Farm Management Deposits
This measure will amend the farm management deposit scheme in Schedule 2G to the Income Tax Assessment Act 1936 to align the tax law with the guidelines for declaring either all primary producers in a geographical area, or specified classes of primary producers within a geographical area, to be in exceptional circumstances.
This will improve the farm management deposit scheme by ensuring that all primary producers, who are eligible for early withdrawal due to exceptional circumstances, will retain the tax benefits available under this scheme.
This measure will commence retrospectively from 1 July 2002.
CANBERRA
13 February 2008
Media Contact: James Cullen - 0409 719 879