Schedule 4
National Urban Water and Desalination Plan—urban water tax offset
Background
5.1
Schedule 4 relates to the government's $1 billion National Urban
Water and Desalination Plan, announced in the 2008 Budget. Under this plan,
the government will fund large infrastructure projects to assist cities and
towns meet future water demand. The plan is part of the government's Water
for the Future plan, a ten-year, $12.9 billion initiative to secure the
long-term water supply for Australia.[1]
The security of water supplies 'will be achieved by supporting major
desalination, water recycling and stormwater harvesting projects'.[2]
Purpose
5.2
The amendments to the Income Tax Assessment Act 1997 (ITAA)
'provide a general exemption from capital gains tax for capital gains arising
from a right or entitlement to a tax offset, deduction or similar benefit'.[3]
Amendments are made to 'provide a refundable tax offset in relation to certain
projects approved under the National Urban Water and Desalination Plan' for the
period between and including income years 2008–09 and 2012–13.[4]
5.3
The Hon Chris Bowen MP, Assistant Treasurer, explained:
Under the plan, eligible projects may receive assistance at a
rate of 10 per cent of eligible capital costs, up to a maximum of $100 million
per project.
This schedule implements the refundable tax offset component
of the plan and delivers on the government's election commitment.[5]
5.4
Financial assistance will be provided as refundable tax offsets for
private sector applicants, or as grants for applicants outside the tax system
such as water utilities and governments. In order to be entitled to a tax
offset, the company is required to have a valid certificate for the project,
issued by the Water Minister for one income year at a time, and must meet
project milestones. A certificate may be revoked, and the Water Minister's
decisions may be reviewed by applying to the Administrative Appeals Tribunal.[6]
5.5
The plan finishes in 2013–14, and the provisions are repealed with
effect from 1 July 2014.[7]
5.6
The schedule makes some consequential amendments to the ITAA 1997.[8]
5.7
The proposal was announced in the 2008 Budget.[9]
Financial impact
5.8
The financial implications of the proposal are as follows:
|
2008–09
|
2009–10
|
2010–11
|
2011–12
|
|
-$14m
|
-$129m
|
-$195m
|
-$315m
|
5.9
The compliance cost is expected to be moderate.
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