Chapter 1
Background to the Inquiry
1.1 The original Taxation Laws Amendment Bill (No. 4) 1998 was introduced
into the House of Representatives on 2 April 1998 and the Senate on 22
June 1998. The Bill was referred to this Committee by the Selection of
Bills Committee on 27 May 1998 [1] for examination
and report by 25 June 1998. The Senate extended the date of reporting
to 11 August 1998, however the Senate amended the spring sitting
pattern on the last day of sitting and as a result the Senate did not
sit on that date. The Committee tabled an interim report on 11 August
1998. With the announcement of the general election on 30 August 1998
and proroguing of Parliament, the Bill lapsed.
1.2 A new Taxation Laws Amendment Bill (No. 4) 1998 was introduced into
the House of Representatives on 3 December 1998 [2].
The Bill was referred to this Committee by the Senate following a report
of the Selection of Bills Committee on 18 February 1999 [3]
for examination and report by 29 April 1999. On 28 April 1999 the Senate
extended the date of reporting to 13 May 1999. On 12 May 1999 the Senate
further extended the date of reporting to 27 May 1999.
1.3 In referring this Bill for inquiry, the Selection of Bills Committee
noted that the principal issues for consideration were “to allow
close examination of the proposals in order to improve Australia's attractiveness
as a financial centre”.
1.4 The referral of the original Taxation Laws Amendment Bill (No. 4)
1998 was to consider retrospective application of sales tax on infrastructure
projects, gifts and possible anomalies in depreciation provisions.
1.5 The committee secretariat contacted all interested parties who had
responded to the original inquiry, and received 3 supplementary submissions
in addition to 2 requests to consider the previous submissions to the
inquiry (Appendix 1 refers). A public hearing on the Bill was conducted
in Canberra on 23 April 1999. A list of witnesses who gave evidence at
the hearing appears in Appendix 2, and the full transcript of the hearing
is available at the internet address of .
1.6 The Bill under consideration differed in several significant ways
to the original Bill with several Schedules omitted from the 1999 Bill
and three previously unseen schedules inserted. The following table shows
the structure of the previous bill and the location of those schedules
in the new bill.
Taxation Laws Amendment Bills 1998 and 1999 - comparison between old
and new bills
| Original TLAB 4 (lapsed at election) |
Location of provisions in new TLAB 4 |
| Sched 1: Sales Tax (exemptions and classifications)
Act 1992 |
Sched 1 of TLAB 5 1999* |
| Sched 2: FBT exemption for approved student exchange
programs |
Not re-introduced |
| Sched 3: Commercial debt forgiveness |
Sched 2 of new TLAB 4** |
| Sched 4: NSW police integrity Commission |
Not re-introduced |
| Sched 5: Deductions for gifts |
Sched 6 of new TLAB 4** |
| Sched 6: Technical amendments of the Income Tax Assessment
Act 1997 |
Not re-introduced |
| Sched 7: Technical amendment of the Income Tax Assessment
Act 1936 |
Not re-introduced |
| Sched 8: Amendment of other Acts |
Not re-introduced |
| Sched 9: "Catch up" amendments |
Not re-introduced |
| Sched 10: Depreciation of plant previously owned by
an exempt entity |
Sched 3 of new TLAB 4** |
| Sched 11: Arrangements treated as a sale and loan and
limited recourse debt |
Sched 2 of TLAB 5* |
| Sched 12: FBT record keeping exemption |
Not re-introduced |
| Sched 13: Franking of dividends by exempting companies
and former exempting companies |
Sched 5 of new TLAB 4** |
* Taxation Laws Amendment Bill No.5 1999 - not referred to the Committee
** Contained in the new Taxation Laws Amendment Bill No. 4 1998 which
currently stands referred to the Committee.
1.7 The new TLAB 4 also contains three new schedules that were not present
in the previous bill:
- Schedule 1 - Australia as a Regional Financial Centre
- Schedule 4 - Franking credits, franking debits and the intercorporate
dividend rate
- Schedule 7 - Distributions to beneficiaries and partners that are
equivalent to interest
1.8 At the 23 April public hearing, the Committee received evidence from
witnesses in relation to the following Schedules of the Bill:
- Schedule 1 – Australia as a Regional Finance Centre
- Schedule 2 – Commercial Debt Forgiveness
- Schedule 3 – Depreciation of plant owned by an exempt entity
- Schedule 5 – Franking of dividends by exempting companies and
former exempting companies
1.9 Officers from the Australian Taxation Office responded on behalf
of the Government.
Footnotes
[1] Selection of Bills Committee report No.
7 of 1998, dated 27 May 1998.
[2] The Bill was introduced into the Senate
on 19 April 1999 as Taxation Laws Amendment Bill (No. 2) 1999.
[3] Selection of Bills Committee report No.
2 of 1999, dated 18 February 1999.