Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

The Treasury Laws Amendment (Refining and Improving Our Tax System) Bill 2023 will assist in refining and improving our tax system going forward. There are five schedules in this bill, and I will go through them.

Schedule 1 amends the International Tax Agreements Act 1953 to give the force of law to the tax treaty between Australia and Iceland, signed in October last year. The Icelandic people are not the most vocal group in my electorate, but good policy comes around to all eventually, and obviously double taxation never makes sense. The Albanese government plans to expand Australia's tax treaty network by negotiating 12 new tax treaties. This Icelandic tax treaty is the first in that line. It further strengthens the relationship between Australia and Iceland at people-to-people level and, obviously, at the level of sovereign state to sovereign state. Iceland, incidentally, is one of the world's richest countries on a per capita GDP basis.

We want to reduce the taxation barriers to trade and investment between Australia and Iceland by lowering withholding tax rates on dividend, interest and royalty payments. This will make it cheaper for Australians to access capital and technology from Iceland and makes Australia a more attractive investment destination for Icelandic people. Iceland has many shared values with Australia, and this tax treaty provides more certainty and reduces compliance costs for individuals with cross-border dealings to facilitate labour mobility and strengthen our cultural ties.

Lastly, this treaty will also support the government's plan to make multinationals pay their fair share of tax. We will do this through added integrity measures and mechanisms to facilitate greater cooperation and information sharing between tax authorities to detect and combat tax evasion.

Schedule 2 also deals with income tax exemption and franking credit refunds for certain subsidiaries of the Future Fund board. This schedule amends the law to exempt wholly-owned Australian-incorporated subsidiaries of the Future Fund Board of Guardians from corporate income tax. Extending this exemption will remove unnecessary administrative and compliance burdens associated with the payment of tax by the subsidiaries and subsequent claiming of refunds. To make it clear, this legislation does not change the net position for either the Commonwealth and the Future Fund—that is that no income tax is collected by the Commonwealth from the Future Fund board.

Schedule 3 changes the status of some deductible gift recipients. There are currently 52 general categories in which an organisation may be eligible for endorsement as a DGR. Currently, four of those DGR categories—environmental organisations, harm prevention charities, cultural organisations and overseas aid organisations—are administered by government departments other than the ATO. The respective government departments are responsible for assessing and advising their ministers on the eligibility of such organisations. That minister and the relevant Treasury minister may then direct the departmental secretary to add the eligible organisation to the register. This proposed change transfers practical responsibility for assessing DGRs from ministers to the Commissioner of Taxation. This will deliver a more consistent national approach, reflective of the other DGR categories.

The amendments generally preserve the existing eligibility criteria and rules for entities seeking endorsement as a DGR. Obviously, current DGRs will continue to be endorsed as long as they meet the existing eligibility criteria. There are some transitional provisions to ensure that the Australian Taxation Office can assess applications currently on hand—good news for entities who are seeking a DGR for these four categories. It will deliver a more streamlined application process that is expected to reduce the time frame for DGR approvals from up to two years to, hopefully, around one month—quite ambitious. In anyone's language, that's a huge improvement and will mean so much to organisations that do that public benefit.

The reform will also repeal provisions relating to maintenance of departmental registers and streamline reporting requirements for organisations with existing DGR endorsement, reducing red tape. Once upon a time, that would have been worthy of notice in a former parliament on red tape day. They were the good old days, when we had red tape day, weren't they?

Schedule 4 deals with the alignment of excise reporting concerning indirect tax. This bill provides deregulatory benefits to small and medium businesses that engage with the fuel or alcohol excise system or import excise equivalent goods. Eligibility will be for those who pay fuel and alcohol excise or excise equivalent customs duty that have less than $50 million annual aggregated turnover in an income year. If the legislation is passed, from 1 July this year these businesses will have the opportunity to apply for permission to lodge and pay their duty quarterly, a benefit for most businesses. They can do this by applying to the Commissioner of Taxation or Comptroller-General of Customs to move to the new reporting schedule. Where additional ad valorem customs duties are payable on imported spirits—normally five per cent of customs value—this will also be moved onto the new reporting schedule. This new quarterly schedule will better align fuel and alcohol excise and customs duty with other indirect taxes, like the GST, on business activity statements. This will reduce admin burdens and help small and medium businesses with their cash flow.

The last schedule deals with small-scale repackaging of beer into small containers—something that I've done much research on in my local electorate. This change will provide deregulatory benefits to retail and hospitality venues who repackage beer from bulk quantities into small containers for immediate retail sale—for those people who have Growlers and other containers on their property. From 1 July, this measure introduces a targeted exemption from alcohol excise licensing requirements. It will apply to the repackaging of the first 10,000 litres of beer from kegs into non-pressurised containers of no more than two litres capacity.

This amendment will remove the disproportionate regulatory requirements on this practice created by the alcohol excise system. Currently businesses, such as breweries in my electorate—Slipstream and the like—who package duty-paid beer into these containers are required to hold a manufacturing licence for excise purposes and pay duty again—in effect, paying double duty. These licences carry significant obligations that are more appropriate to entities that are fermenting, brewing and repackaging beer on a commercial basis in order to protect the lower alcohol excise rate of keg beer. However, filling specified containers in retail settings does not pose an integrity risk. This will ensure larger businesses engaged in this practice in more significant commercial quantities remain appropriately regulated. The sale of takeaway alcohol in retail settings will remain the regulatory responsibility of the states and territories in terms of hours, checking ID and the like.

These five changes include building a better and stronger relationship with Iceland, further reducing red tape for small businesses, streamlining processes for entities doing work in our communities and internationally, and helping the Australian economy. I recommend the bill to the House.

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