Steven Ciobo (Moncrieff, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Hansard source

I thank all members who have contributed to this debate. The two bills before the House today, the Tax and Superannuation Laws Amendment (2014 Measures No. 4) Bill 2014 and the cognate bill, represent another important step in the government's economic action strategy. Our economic action strategy focuses on economic activity that will boost productivity and growth in employment. Our strategy is also about repairing the budget, putting it back into surplus so that we as a nation can start living within our means once again. Failure to fix the budget and take steps towards improving our economy now will materially impact on our living standards in the future.

There is no alterative to the budget repair task and therefore there is no alternative to the government's economic action strategy. We need to get on with the job of paying off the $123 billion of deficits that we inherited from the previous government. The bills before the House today will go part of the way towards doing exactly that.

The bills also continue the government's work in restoring the integrity of the Australian tax system. A backlog of 96 tax and superannuation measures announced but not legislated created significant operational uncertainty for businesses and consumers. We acted swiftly to clean up Labor's mess and to provide certainty and to reduce red tape for all taxpayers.

The first bill that was considered in the cognate debate was the Tax and Superannuation Laws Amendment (2014 Measures No. 4) Bill 2014. During the debate, Labor members have said that the government was not doing enough about taxing large companies, including multinationals. This is plainly wrong. Schedules 1 to 3 of this bill show this. Like much of the actions of the former Labor government, announcements were made without ever following through with the relevant legislation. Some of the measures Labor announced were unimplementable, undeliverable or would have caused severe disruption to Australian businesses. The multiple-entry consolidated-groups measure, for example, was found to be unimplementable, according to the findings of a tripartite review by the ATO, Treasury and the private sector. The offshore banking units measure, also announced by Labor, has not seen any revenue realised or delivered. In Senate estimates, Treasury further confirmed that Labor's proposed section 25-90 change, proposing to target multinationals, would have instead severely damaged Australian businesses looking to grow offshore. It noted that it was not a sensible proposal to proceed with.

Schedule 1 of this bill amends the income tax laws to protect Australia's tax base by tightening and improving thin-capitalisation rules. This bill amends the thin-capitalisation statutory debt limits to bring them more closely into line with commercial debt levels or to regulatory requirements, in the case of banks and non-bank financial entities. It provides additional flexibility with the introduction of a new test for inbound investors to allow gearing of the Australian operations up to the level of gearing of the worldwide group. In line with the government's commitment to reduce compliance costs for business, this bill increases the de minimis threshold from $250,000 to $2 million of debt deductions. Taxpayers below this threshold will not be required to comply with the thin-capitalisation regime.

Schedule 2 contains improvements to the tax exemption available to Australian companies for their foreign non-portfolio dividend income. This allows broader access to the exemption and allows it to flow through interposed trusts and partnerships. The change also improves the integrity of the tax system by ensuring the exemption only applies to returns on instruments treated as equity for tax purposes.

Schedule 3 to this bill amends the taxation laws to improve the integrity of the foreign resident capital gains tax regime by preventing the double counting of certain assets under the regime's principal asset test. Schedule 3 also makes technical amendments to the regime's reference to 'a permanent establishment' to ensure the regime applies where assets are used in carrying on a business through a permanent establishment in Australia.

Schedule 4 to this bill amends the income tax laws to require the Australian Taxation Office to send Australian taxpayers a tax receipt, a commitment this government made at the last election. This tax receipt will detail for each taxpayer how we as the Commonwealth government are spending their money and how much the government has borrowed on their behalf. Schedule 5 corrects minor technical or drafting defects, removes anomalies and addresses unintended outcomes in the law.

The second bill considered today was the Tax and Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014. This bill amends the Income Tax Assessment Act 1997 to implement a range of changes to Australia's tax laws. These changes will return around $1.4 billion to the budget over the forward estimates. Schedule 1 of the bill abolishes the mature age worker tax offset. The mature age worker tax offset reduces by up to $500 the amount of tax payable for those who are already working. It does not help to reduce labour market disadvantage. Older Australians want to work. We need them to work. A prosperous Australia depends on everyone contributing to a strong and sustainable economy, and older Australians just need to be given this opportunity to contribute. Abolishing the mature age worker tax offset will save Australian taxpayers around $760 million over the forward estimates period, which the government is redirecting to a new wage subsidy called Restart.

Schedule 2 abolishes the seafarer tax offset. Put simply, the seafarer tax offset does not work. The seafarer tax offset is a 30 per cent refundable tax offset provided to companies for salary, wages and allowances paid to Australian resident seafarers who are employed to undertake overseas voyages on certified vessels. The offset was supposed to increase employment in the shipping industry, but no noticeable increase in employment of Australian seafarers occurred. The offset was supposed to result in significant new investment in the shipping industry, but no noticeable increase in investment occurred. The repeal of the seafarer tax offset will save Australian taxpayers $12 million over the forward estimates. I noted the contribution from the member for Grayndler earlier in the debate. Through all the huffing and puffing he seemed to be saying that this was a measure that would yield great results if only it were given more time. The fact that there are only some 20 shipping companies, with only approximately 250 employees, affected by this measure just indicates what a failure this policy was. I personally found it most interesting that once again we had a Labor MP standing in this chamber lecturing the coalition about how Labor understood what was good for business—despite the fact that, when you actually look at the impact of the measure, it was indiscernible. It was simply costing money and was, in reality, delivering nothing—hence my comments that the member for Grayndler was more concerned about stitching up MUA support bloc for his preselection than he was about doing something for Australian industry.

Schedule 3 reduces the tax offset available under the research and development tax incentive by 1.5 percentage points for income years commencing on or after 1 July 2014. The decision to reduce the offset rates provided by the R&D tax incentive was difficult, but repairing the budget must be done as fairly and equitably as possible. The R&D tax incentive will continue to support thousands of eligible companies in all sectors of the Australian economy in conducting research and development through the provision of a generous, easy-to-access program. This measure of course applies only to the very largest companies, those having an assessable income of $20 billion or more. This measure will provide a gain to revenue of around $620 million over the forward estimates period.

The fourth measure in this bill is about deductions for gifts to benevolent not-for-profit bodies. Schedule 4 adds three new deductible gift recipients. This will allow Australian Schools Plus; the East African Fund, which operates the School of St Jude; and the Minderoo Foundation Trust to receive tax-deductible donations. Australian Schools Plus is a vehicle to collect donations from the public for disadvantaged schools. This will actively address the perception that these schools find it relatively difficult to attract donations. The School of St Jude provides free high-quality education to children in Tanzania who would otherwise be unlikely to complete their schooling. St Jude's has over 2,000 students from various religions and 35 different tribal backgrounds. The Minderoo Foundation Trust operates a range of programs, including the Walk Free Foundation, GenerationOne and Hope for Children.

These bills will improve the integrity of Australia's tax system and return over $2 billion to the budget over the forward estimates. These measures represent another chapter in our Economic Action Strategy and our drive to provide certainty for all taxpayers. This in turn will build a stronger, more sustainable economy and a more prosperous Australia. I commend these bills to the House.

Question agreed to.

Bill read a second time.

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