David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill amends various taxation and superannuation laws to implement a range of improvements to Australia's tax and super laws.

Schedule 1 amends the film tax offset provisions of the income tax law by inserting a definition of 'documentary' that is consistent with the Australian Communications and Media Authority's guidelines.

The producer offset applies to films that satisfy a number of criteria, including making a minimum level of qualifying Australian production expenditure. That level is lower for documentaries than it is for other films. The amendments ensure that this concession is appropriately targeted and that a consistent definition applies across all the film tax offsets.

The schedule also explicitly includes 'game shows' in the list of light entertainment programs that are ineligible for the film tax offsets. This clarifies the intended scope of the existing law.

Schedule 2 to this bill exempts from income tax the Disaster Income Recovery Subsidy and the ex-gratia payment equivalent to the Australian Government Disaster Recovery Payment paid to New Zealand non-protected special category visa holders.

The Queensland and New South Wales floods and the Tasmanian and Wambelong bushfires have had devastating consequences for affected communities.

The Australian government is giving employees, small business owners and farmers a helping hand with payments to both Australians and New Zealand special category visa holders. At this difficult time, it's important that these payments are not subject to tax.

Exempting these payments from tax maximises the value of the payments for people affected by recent disasters. It also ensures that the payments are treated in the same way as previous disaster assistance payments, such as those made in the wake of cyclone Yasi in 2011.

Schedule 2 to this bill also exempts any future ex gratia Australian Government Disaster Recovery Payments that the government might make for natural disasters that occur up to 30 June 2013.

Schedule 3 to this bill amends the GST law to enable those small business taxpayers who are paying their GST by instalments, and who subsequently move into a net refund position, to continue to use the GST instalments option if they choose to do so.

The amendments provide that taxpayers who move into a net refund position and who choose to continue to pay GST by instalments receive an instalment amount each quarter of zero. Taxpayers who are currently not using the instalment option and are already in a net refund position will remain ineligible to pay their GST by instalments while they remain in a net refund position.

The amendments will ensure that the compliance cost advantages of reporting annually can be retained for those taxpayers who use the instalment option and move into a net refund position.

Schedule 4 amends the list of deductible gift recipients identified by name in division 30 of the Income Tax Assessment Act 1997. Donations made to entities with DGR status are income tax deductible to the donor and therefore DGR status will assist the listed entities in attracting public financial support for their activities.

Six entities are proposed to be added to the act, namely, The Conversation Trust, National Congress of Australia's First Peoples Limited, National Boer War Memorial Association Incorporated, the Anzac Centenary Public Fund, the Australian Peacekeeping Memorial Project Incorporated and Philanthropy Australia Incorporated.

Schedule 5 to this bill amends the Superannuation Industry (Supervision) Act 1993 to place a duty on trustees of particular superannuation funds to establish and implement procedures in relation to the consolidation of multiple member accounts within their fund on a periodic basis.

In determining whether to consolidate accounts, trustees must do so with regard to the member's best interests.

At June 2012 there were almost 32 million superannuation accounts in Australia—almost three accounts for every worker. This measure will facilitate a steady reduction in the number of unnecessary accounts in the superannuation system. This will protect Australians' retirement savings from being eroded by unnecessary fees and charges.

The measure commences on 1 July 2013, and trustees must undertake the first round of consolidations by 30 June 2014.

Schedule 6 will reduce the matching rate and maximum payment of the voluntary superannuation co-contribution from 1 July 2012, as the new low-income superannuation contribution (LISC) applies from the 2012-13 income year. These changes mean that for the co-contribution, the government will contribute 50c for every dollar of eligible personal contributions an individual makes up to a maximum of $500.

The low-income superannuation contribution will reach over an estimated five times as many low-income earners as the current co-contribution as a result of these changes and will better target tax concessions for low income individuals. Individuals are not required to make personal contributions to superannuation in order to receive the low-income superannuation contribution.

Schedule 6 will also extend the freeze on the indexation of the lower income threshold to the 2012-13 income year. This is the income threshold above which the maximum superannuation co-contribution begins to phase down to the 2012-13 income year so it remains at $31,920 in 2012-13. The income threshold above which no co- contribution is payable will be reduced to $15,000 above the lower income threshold, that is, $46,920 for the 2012-13 income year.

The changes to the co-contribution will generate cash savings of an estimated $987 million by the 2015-16 income year.

Schedule 7 consolidates eight separate tax offsets for dependants into one new tax offset from 1 July 2012. The eight tax offsets to be consolidated are the carer spouse, invalid spouse, invalid relative, parent/parent-in-law, child-housekeeper, child-housekeeper (with child), housekeeper and housekeeper (with child) tax offsets.

By consolidating these tax offsets we are removing outdated barriers to workforce participation and building on the government's participation agenda. In addition, these changes will better target assistance to dependants who are genuinely unable to work.

The new tax offset will be called the dependant (invalid and carer) tax offset. It will be paid at the highest of the rates of the consolidated tax offsets. The offset will be limited to taxpayers who contribute to the maintenance of a dependant who is genuinely unable to work because of invalidity or carer obligations.

This reform is consistent with the Australian Future Tax System Review and builds on the government's record of tax reform.

These new arrangements do not affect existing arrangements for taxpayers eligible for the zone tax offset, overseas forces tax offset, overseas civilian tax offset or the dependant spouse tax offset for spouses born before 1 July 1952.

Schedule 8 amends division 230 of the Income Tax Assessment Act 1997 and the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009.

The amendments refine and clarify the operation of the taxation of financial arrangements regime, lower compliance costs and provide additional certainty to affected taxpayers. This includes: clarifying the application of the accruals and realisation tax timing methods; expanding the application of the fair value tax timing method; ensuring that the tax hedging method and transitional balancing adjustment provisions operate as intended; and lowering the compliance costs of making various elections for foreign banks with branches in Australia.

The proposed amendments are the outcome of ongoing monitoring of the implementation of the taxation of financial arrangements regime, and were announced following extensive consultation with the Australian Taxation Office and industry.

These changes will apply from the start of the TOFA stages 3 and 4 regime.

Full details of these measures are contained in the explanatory memorandum.

Debate adjourned.