Katie Allen (Higgins, Liberal Party) Share this | Hansard source

I rise to speak on the Treasury Laws Amendment (2021 Measures No. 4) Bill 2021. This bill addresses a number of tax issues and introduces the continuation of the low- and middle-income tax offset, an offset that has been so important during the time of COVID and has been widely welcomed right across Australia, including, of course, in my seat of Higgins. I know that many of my constituents have been waiting anxiously for this offset to take effect, in light of the financial strain that they've experienced as a result of the COVID-19 pandemic and associated lockdowns and restrictions imposed on all Australians and most particularly in my state of Victoria.

I was delighted to hear that approximately 65,700 taxpayers in my electorate of Higgins will benefit from tax relief of up to $2,745 this year. In fact, the Treasurer, the Hon. Josh Frydenberg, joined me in Higgins and met with two of my constituents—Amy, a kindergarten teacher, and Darren, a small business owner—who have their first child on the way, and they are looking forward to the extra tax relief that this bill will offer. In fact, Amy told me how she will use this money to help set up the nursery for her baby—an exciting time of life which can be tempered by the extra costs of having another mouth to feed.

This bill also supports business by providing an additional fringe benefits tax exemption, by supporting consumers of financial products through additional ASIC oversight and, finally, by protecting our elderly population from potential exploitation through exempting granny flats from capital gains tax. So there are many measures in this bill, and I'd like to talk through several of those this morning. But first I'd like to say it is so important to support each and every Australian through the ongoing COVID-19 economic recovery and help them to further our economy—after all, our economy is built on the hard work of each and every Australian—and the amendments in this bill aim to do exactly that. We're providing additional support to taxpayers through extension of the highly popular low- and middle-income tax offset. That will help to free up their resources, which will help to stimulate the economy and lead to greater opportunities and prosperity for all Australians.

Importantly, these tax initiatives will also protect one of our most vulnerable cohorts, our older Australians, from the financial and elder abuse often associated with what is commonly known as granny flat arrangements. Protecting a granny flat arrangement by way of removing the CGT implications will have the added bonus of allowing ageing Australians to age at home longer, surrounded by their family and loved ones. That's something we should all welcome. We know Australians are choosing to age at home and that this is their preference. That is what our government does; it listens to the needs of the very people that we represent.

Schedule 1 is about FBT exemptions for retraining. The fringe benefits tax exemption to support retraining and reskilling provides an exemption for employer-provided retraining and reskilling. Currently, fringe benefits tax is payable if an employer provides training to employees that is not sufficiently connected to their current employment. This measure will benefit any employer providing retraining benefits to redundant or soon-to-be redundant employees. The employer can apply this exemption where a redundant employee is redeployed to another area of their business or where the new employment is outside their business. The exemption will be available for university, vocational education and non-vocational educational training courses which support redundant employees in finding new employment.

If there was one word that everyone thought about in 2021 besides the word 'COVID', it would be the word 'pivot', and that is why I support this schedule—because it is so important that, as people go through the changing world that we're seeing both post COVID and as we move into the 21st century of the knowledge economy, we need to help people to retrain, reposition and pivot to the new world of work. This measure will support the government's skills reform agenda and current programs and assistance for education and training. The government's continued investment will support apprenticeships, create jobs and boost the skills of Australians to help them get back to work, because, as we know, the dignity of work is something that we value very highly.

Schedule 3 provides a targeted capital gains tax exemption for granny flat arrangements where there is a formal written agreement. CGT consequences are currently an impediment to the creation of formal and legally enforceable granny flat arrangements. The Australian Law Reform Commission released a report in 2017 which examined elder abuse in Australia. We all are going to grow old—hopefully; the alternative is not worth thinking about. But we all want to know that we can age with dignity and grace and we all want our relatives and our friends who are older not to be the victims of elder abuse. The Australian Law Reform Commission examined the prevalence of elder abuse in relation to granny flat arrangements in particular. This schedule in the bill is an incredibly important one with regards to these arrangements. When faced with a CGT liability, families often opt for informal arrangements, which can lead to financial abuse and exploitation of older people. This amendment ensures that CGT consequences are not an impediment to formalising granny flat arrangements and seeks to reduce the risk of financial abuse and exploitation of older Australians and other vulnerable people.

The measure has extensive support from stakeholders, because this schedule has been extensively consulted about and there has been extensive public discussion of the processes. In a typical case, granny flat arrangements occur when an older person transfers some sort of consideration, often title to property or proceeds from the sale of property, to their adult child in exchange for the promise of ongoing care, support and housing. These arrangements can be beneficial to all parties; that's obvious. When operating effectively, they can provide benefits to the adult child in the way of property or funds and to the older person in the way of care, support and housing. However, the older person tends to be in a more vulnerable position and can suffer serious consequences if circumstances change. Problems can arise as a result of the adult child predeceasing the older person, relationship breakdowns between the adult child and their partner, or the adult child becoming bankrupt. Contingencies are often not considered for these types of events happening. This, combined with the common informality of granny flat arrangements, can make it difficult for the older person to establish, assert or enforce their rights under the arrangement.

Perceived tax consequences are one barrier to parties having a formal granny flat arrangement in place. CGT events could arise on entering into, varying or terminating a granny flat arrangement, depending on the circumstances. Informal arrangements can make it easier for a taxpayer to argue that there are no formal rights in existence and, therefore, no assets that could be subject to CGT. With these amendments, a CGT event does not happen on entering into, varying or terminating a granny flat arrangement if certain requirements are met. These requirements include that the individual having the granny flat interest has reached pension age or has a disability. In the days of the NDIS, these sorts of arrangements are really very important. The arrangement needs to be in writing and not be of a commercial nature.

The intent of this measure is to encourage the formalisation of granny flat arrangements to support the stable and long-term housing arrangements of older people and people with disabilities and to reduce the risk of financial abuse or exploitation. We all know families where there is a child with a disability. Parents worry about the long-term sustainable future of their children, and these sorts of amendments will be helpful in sorting these issues out.

With regard to schedule 4 of the bill, there will be an amendment to the product intervention regime to address unintended consequences and to ensure that the product intervention regime operates as intended. A product intervention order is an order made by ASIC under its product intervention powers to impose conditions on or, if necessary, to ban potentially harmful financial and credit products where there is a risk of significant detriment to retail clients or customers. Removing ambiguity and ensuring that ASIC has the ability to intervene in relation to the costs of a financial and credit product—such as administrative fees, interest charges, surcharges or default fees—paid by a retail client or consumer through the use of a product intervention order is critical for retail client and consumer protection against significant detriment. Again, this is an important safety net to ensure that, as we go through a post-COVID recovery, we don't find people becoming more financially vulnerable. Importantly, this also increases consumption investment as a result of greater uptake of worthy financial products due to increased confidence and trust. The taxpayers of Australia need to be able to trust and respect our financial institutions and the products that they develop.

This bill provides tax relief to those who need it most. I'm very pleased that schedule 6 will come into effect, once this bill is passed, to provide a low and middle income tax offset. This bill will create $7.8 billion in tax cuts to around 10.2 million low- and middle-income earners by retaining the low and middle income tax offset for the 2021-22 income year. The low and middle income tax offset is worth up to $1,080 for individuals and $2,160 for dual-income households and is paid on assessment once taxpayers lodge their tax returns. It's something to keep in mind. Retaining the low and middle income tax offset in 2021-22 will support household incomes as the economy continues to recover. I know this has been a very popular COVID measure, and I'm very pleased that it's going to continue into this next year. As we emerge from COVID it is an important period of time with regard to our growth and development. And as we see the vaccination rolling out across the country I'm very pleased that we're moving to a post-COVID recovery—but we're not there yet, and we need to continue to provide the support that is needed by those on low and middle incomes.

This bill provides tax relief to those who need it most—low- and middle-income earners—at a time when they need it most. The bill goes further by helping employees and businesses alike to incentivise retraining and upskilling, and it protects consumers from low-quality and poor-value financial products. It also provides more certainty to often elderly or disabled Australians in order to make the most of granny-flat arrangements without needing to worry about the CGT implications. I commend this bill to the House.

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