Tax Laws Amendment (2008 Measures No. 1) Bill 2008

The Government has introduced Tax Laws Amendment (2008 Measures No. 1) Bill 2008 to implement a number of improvements to Australia’s taxation system, including the following:

Superannuation Lump Sums Paid to the Terminally Ill
The Bill will ensure that superannuation lump sum payments that are paid to a persons suffering from a terminal medical condition will be tax free, subject to conditions.

The Rudd Government has brought forward the date of effect for the measure so that it applies to payments made on or after 1 July 2007 rather than the 12 September 2007 that was originally announced by the former government.

Tax Deductibility for Trees Established in Carbon Sink Forests
This measure will encourage the establishment of carbon sink forests and highlights the Government's commitment to addressing climate change.

Under the changes the establishment costs will be immediately deductible for trees established in carbon sink forests in the 2007-08 to 2011-12 income years inclusive.  After this initial period, establishment costs will be deductible over 14 years and 105 days at a rate of 7 per cent per annum.

To be eligible for the deduction, the taxpayer must be carrying on a business and the carbon sink forest must meet Environmental and Natural Resource Management Guidelines.

Political Donations
The Government will remove the tax deductibility of political donations made on or after 1 July 2008 in line with its election commitment.

The  Government is repealing the specific deduction provisions in Division 30 of the Income Tax Assessment Act 1997, which currently allow deductions for contributions and gifts to political parties and to independent candidates and independent members up to a maximum of $1,500.

In addition, to ensure that a deduction is not available, these amendments also remove general deductions for business taxpayers for contributions and gifts to political parties, members and candidates.