17 March 2010

Second Tax Reform Bill of 2010 introduced into Parliament with focus on fairness and integrity of the tax system

The Assistant Treasurer, Senator the Hon Nick Sherry, today announced the introduction of a major piece of tax legislation to improve the fairness and integrity of the tax system.

The Tax Laws Amendment (2010 Measures No. 2) Bill 2010 which was introduced into the House of Representatives today contains important tax integrity measures announced in the 2009‑10 Budget in addition to a range of other amendments.

The Bill contains several key measures:

  • The tightening of the non-commercial loan rules (Division 7A) to removes the scope for private companies to allow shareholders and their associates to use company assets — such as real estate, cars and boats — for free, or at less than their arm's length value, without paying tax.
    • There are exemptions to ensure farmers and small businesses people who legitimately use a residence in connection with their business are not disadvantaged.
  • The extension of the tax file number (TFN) withholding arrangements to closely held trusts and family trusts in order to prevent taxpayers from avoiding paying their fair share of tax.
  • Providing an income tax exemption for benefits received by eligible recipients of the HECS‑HELP benefit initiative introduced in the 2008-09 Budget.

In addition to these measures the Bill will update the list of deductible gift recipients (DGRs) to include the Sichuan Earthquake Surviving Children's Fund and the Bali Peace Park Association Inc and extend the DGR status period for the Yachad Accelerated Learning Project Limited for another three years.

Donations to all organisations with DGR status are tax deductible.

Finally, as the Rudd Government continues its commitment to mitigating the risks of climate change, including reducing carbon emissions, the Bill will make the Global Carbon Capture and Storage Institute Limited income tax exempt for a four year period.

The Institute will accelerate the development and global adoption of environmentally sustainable carbon capture and storage technology, including compressing, transporting and monitoring carbon emissions.