Craig Thomson (Dobell, Australian Labor Party) Share this | Hansard source

As the member for Parramatta points out, we are constantly reminded by our constituents, particularly those on fixed incomes or those on pensions, of the high-taxing history of the former government.

I rise to support the Tax Laws Amendment (2011 Measures No. 2) Bill 2011. It has a number of schedules, and I will go through each of those schedules to look at what they are actually proposing. The first schedule is about deductible gift recipients. Under the current law taxpayers can claim income tax deductions for certain gifts to organisations with DGR status. Division 30 of the Income Tax Assessment Act 1997 sets out the requirements for organisations to be granted DGR status. Organisations must either fit one of the general categories of DGR or be specifically listed under these provisions. This schedule lists the Charlie Perkins Trust for Children and Students and the Roberta Sykes Indigenous Education Foundation. It also changes the name of one deductible gift recipient from Guides Australia Inc. to Girl Guides Australia.

The Charlie Perkins Trust was established in late 2002 in memory of the late Dr Charles Perkins AO. The trust's aim is to advance the education of Aboriginal and Torres Strait Islanders through the provision of scholarships to Indigenous persons for study at overseas institutions such as Oxford and Cambridge University. The Roberta Sykes Indigenous Education Foundation was established in 1990 and works to advance the education and life opportunities for Aboriginal and Torres Strait Islanders and provide additional assistance, such as assisting with the cost of relocating families and partners, to female Indigenous scholars undertaking programs overseas. Listing the Charlie Perkins Trust for Children and Students and the Roberta Sykes Indigenous Education Foundation means that the organisations will be in a significantly better position to attract private and corporate donors, and to raise funds for their ongoing work supporting Indigenous Australians to undertake higher education at prestigious overseas universities such as Oxford, Cambridge and Harvard.

Schedule 2 is in relation to self-managed superannuation fund investments in collectables and personal use assets. This measure will allow implementation of the government's election commitment to tighten legislative restrictions on self-managed superannuation funds, investments and collectables and personal use assets. The Super System Review recommended that SMSF investments in collectables and personal use assets should be prohibited because these assets lend themselves to personal enjoyment and therefore can involve current day benefits being derived by those using or accessing these assets. This recommendation was restricted to SMSF investments because of the closely held nature of SMSFs, where members have direct control over the investment of their retirement savings.

In response to criticisms of the recommendation by SMSF and art industry representatives, the government rejected this recommendation in recognition that collectables can be legitimate investments for some SMSF trustees. However, the government also announced that it would tighten the legislative standards applying to SMSF investment in collectables and personal use assets to ensure that such investments do not give rise to current day benefits for SMSF trustees. The legislative standards that will apply to SMSF investment in collectables and personal use assets are being developed in consultation with the industry, and will be set out in regulations. These measures will enable those regulations to be made. This measure also removes a reference to the provision that was repealed on 24 September 2007.

These amendments will allow implementation of the government's election promise to tighten legislative restrictions on self-managed superannuation fund investments in collectables and personal use assets to ensure that they do not give rise to current day benefits. It will give authority for regulations to make rules in relation to how these investments are made, held and realised. It will also give the regulations authority to impose a penalty of not more than 10 penalty units for contraventions of the regulations, and to provide for the transitional period of existing investments held prior to 1 July 2011. The regulations being developed in consultation with industry will be released for public consultation prior to being finalised. These amendments, as I have also said, remove reference to a provision that was repealed on 24 September 2007.

Schedule 3 relates to superannuation tax file number amendments. Schedule 3 makes a number of amendments which will improve the operation of the superannuation industry. It allows superannuation fund trustees and retirement savings account providers to use tax file numbers to locate members' accounts without first having to use other methods of identification, and will facilitate account consolidation. The new law will allow superannuation fund trustees and RSA providers to use tax file numbers to locate a member's account details. However, the law will not allow the fund to use tax file numbers to replace their existing account numbers. The aim of the law is to remove the impediment for funds to use other search methods before tax file numbers are used. It will not replace existing account identification methods, such as account or membership numbers. This ensures that the amendment operates in accordance with the National Privacy Principle 7: that tax file numbers should not become a national identifier. The amendments will also allow superannuation fund trustees and RSA providers to use tax file numbers to facilitate the consolidation of multi-accounts held by the same person in the same superannuation fund and across multiple superannuation funds, provided the requirements of the regulations are met.

These amendments will improve the administrative efficiency of the superannuation industry, and make it easier for superannuation fund trustees and retirement saving account providers to locate member accounts and to facilitate account consolidation. These amendments will be subject to appropriate privacy safeguards. In keeping with the current guidelines governing the use of tax file numbers, it will remain voluntary for individuals to provide their tax file number to their superannuation fund or to their RSA provider.

The measure is part of the government's package of stronger super reforms, which were announced on 16 December 2010. Allowing for the greater use of tax file numbers is the first of a number of initiatives from the package that will improve the administrative efficiency of the superannuation industry. Regulations will be enacted to support the use of tax file numbers and to facilitate the account consolidation process. This will include requirements for member consent and other procedures and processes that superannuation fund trustees and RSA providers must follow before consolidating accounts. These regulations will, again, be developed in consultation with the industry. Schedule 4 exempts Australian taxes, fees and charges from the goods and services tax. Currently, Australian taxes, fees and charges are exempt from GST by being listed in a determination made by the Treasurer under division 81 of the GST act and agreed to by the states and territories. The determination has grown to over 680 pages, and its compilation is a cumbersome and time-consuming process. The schedule will repeal and replace division 81 of the GST act to allow entities to self-assess the GST treatment of a payment of an Australian tax or an Australian fee or charge in accordance with certain principles. Under these amendments, government entities will no longer need to have an Australian tax or certain categories of Australian fees or charges listed on the determination in order for those taxes, fees or charges not to be subject to GST. The amendments will amend the GST law to replace the current mechanism for exempting Australian taxes, fees and charges with a legislative exemption with effect from 1 July 2011. Generally, the measure will provide the same outcome as the current mechanism but in a more efficient manner. This measure will provide increased certainty to taxpayers and government agencies in relation to the GST treatment of new taxes, fees and charges, as the tax treatment is not dependent on the item being listed in the determination. A legislative exemption will provide a more effective and transparent approach to exempting Australian taxes, fees and charges from the GST compared to the current exemption mechanism.

Schedule 5 relates to the 12-month export period for the GST-free supply of boats. The legislation provides that the supply of a new recreational boat will be GST free if the boat is exported from Australia within 12 months of delivery or certain other events in the case of payment by instalment. This is subject to certain conditions. There are two main sets of conditions: conditions relating to the nature of the boat—the boat must be a new recreational boat—and the boat must not be used in any form of disqualifying activity, with certain exemptions. Under the conditions for a new recreational boat, essentially the boat must be constructed in Australia; not be a substantially reconstructed boat; not used, sold or leased since completion, except in connection with the supply or acquisition of the boat as trading stock, or in connection with the particular supply or acquisition by the purchaser under consideration; be principally designed or fitted out for recreational purposes and not be a commercial boat. The first two conditions essentially ensure the boat is a new boat; the last two conditions ensure the boat is a recreational type boat. Under the disqualifying use conditions, the boat cannot be used as security for a loan except a loan to buy the boat itself. It cannot be used to carry on an enterprise in Australia. It cannot be used to carry on an enterprise outside Australia, except for private or domestic purposes or for a private recreational pursuit or hobby. The former exemption may embrace the latter exemption, which has been added out of caution.

Essentially, an overseas business may buy a new recreational boat in Australia and allow its employees to sail around Australia in the boat, or live in it while it is moored somewhere for 12 months and for consideration except where the employee of an overseas business is allowed to sail or live on the boat as above, or the boat is used to compete in a race or sporting event. Essentially, these conditions are designed to use the boat for commercial purposes or financial gain while in Australia. The actual supply of the boat by the supplier to the purchaser relates to the carrying on of an enterprise, but is not a disqualifying activity. The commissioner has the discretion to extend the 12-month export period as he does under the existing 60-day export period for a GST-free supply.

An exemption from disqualifying use has been provided to the use of the boat in a private capacity by the purchaser to participate in a racing or sporting event. This is in recognition that Australia is home to world-class sporting events including boats, such as yacht races and waterski events, and that participation in such events with a new boat built for Australian conditions could encourage some purchasers—in particular, foreign purchasers—to buy a new boat in Australia.

The measure was not implemented via a refund system, as proposed by several submissions, for administrative and legal reasons. A refund system would relieve the supplier of any further GST obligations after he paid the GST to the government. However, a mechanism was not available within existing resources to pay refunds of this nature. Further, these submissions suggested that a control permit be deemed to have been granted to the purchaser immediately after the boat was purchased and the supplier forwarded the GST. This would have been a necessary component for the use of a refund system to implement the measure. However, to grant and control permits in this way would have required more complex legislative changes than in this bill, and this would have delayed considerably legislation to implement the measure. Schedule 6 is in relation to other amendments. Schedule 6 makes various other amendments to the taxation laws. The amendments seek to ensure that taxation operates as intended by correcting technical or drafting defects. It is essentially a technical schedule.

While this may not be the most exciting piece of legislation, it is nonetheless an important piece of legislation. It is part of this government's ongoing reform in relation to taxation generally. It is part of making sure that business in Australia is simpler and more streamlined. For those reasons it is important that this legislation be supported. I commend the bill to the House.

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