I am announcing two amendments to the measures contained in Taxation Laws Amendment Bill (No. 5) 1998 which will further enhance Australia as a regional financial centre. Those measures relate to the proposed widening of the interest withholding tax exemption under section 128F of the Income Tax Assessment Act as announced by the Government on 8 December 1997 in the Australia - A Regional Financial Centre component of the Governments Investing for Growth Statement.
The first amendment is to allow bearer debentures or interests in bearer debentures to be issued to Australian residents and still attract the interest withholding tax exemption under section 128F. This will further integrate the domestic and offshore corporate debt markets by allowing companies to offer bearer debentures simultaneously to investors in Australia and overseas.
The second amendment is that an Australian company acting in the capacity of trustee for an Australian trust will be treated as a company for the purposes of section 128F, provided the trust is not a charitable trust and that the beneficiaries of the trust are companies for the purposes of 128F but not including trustee companies. This amendment will allow financial institutions involved in securitisation transactions to more easily access the section 128F interest withholding tax exemption. It will increase competitive pressures in lending for home buyers and consumers by allowing lenders to access the cheapest funds free of withholding tax.
Both amendments will apply to debentures issued after 2 July 1998 the date of effect of the section 128F interest withholding tax measures included in Taxation Laws Amendment Bill (No. 5) 1998.
These amendments will further encourage the development of the domestic corporate debt market and are in line with the Governments objectives of enhancing Australias attractiveness as a financial centre in our region.