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26 Jun 08 2008 Measures No 4 Bill introduced

On 26 June 2008, Tax Laws Amendment (2008 Measures No 4) Bill 2008 was introduced into the House of Representatives. The following has been extracted from the EM to the Bill.

SCHEDULE 1 to the Bill amends the ITAA 1997 to provide relief from capital gains tax (CGT) to private health insurance policy holders when their insurer converts, by demutualising, from being a not for profit to a for profit insurer. These amendments apply to demutualisations that occur on or after 1 July 2007.

SCHEDULE 2 to the Bill amends Schedule 2F to the ITAA 1936 (the trust loss measures) to change the definition of ‘family’ to limit lineal descendants to children or grandchildren of the test individual or of the test individual’s spouse. These amendments also remove the ability for family trusts to make a one-off variation to the test individual specified in a family trust election (other than specifically in relation to the 2007-08 income year or a marriage breakdown).

As a transitional measure effective from the 2007-08 income year, the amendments allow family trusts that meet the conditions specified in s 272-80(5A), to make a one-off variation valid for only the 2007-08 income year. A family trust that makes such a variation will revert back to the test individual specified in the original family trust election from the 2008-09 income year: see proposed s 272-80(5B).

The amendments to limit lineal descendants to children or grandchildren of the test individual or of the test individual’s spouse apply to the 2008-09 income year, and later income years.

The amendments to remove the ability of family trusts to make a one-off variation to the test individual specified in a family trust election (other than specifically in relation to the 2007-08 income year or a marriage breakdown) apply to the 2007-08 income year, and later income years.

SCHEDULE 3 to the Bill makes technical corrections and other minor amendments to the taxation laws.

For a copy of the Bill, go here

For a copy of the EM, go here

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