Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

On behalf of the opposition, I rise to speak on the Tax Laws Amendment (2011 Measures No. 6) Bill 2011, which was introduced into this House on 22 June by the Assistant Treasurer, the member for Maribyrnong. This bill has three schedules. I will say at the outset that the coalition will not be opposing this bill. As is often the case and as I have said on many previous occasions, bills such as this correct unintended errors, add to the tax law in other important ways and ensure the ongoing operation of an efficient and fair tax system. This bill is no exception.

I will deal with each of the three schedules. The first schedule exempts the outer regional and remote payment made under the Better Start for Children with Disability initiative from income tax. The second schedule provides an exemption for fringe benefits tax for transport, specifically with regard to circumstances where an employee is receiving fringe benefits in a remote overseas location—and I will come back to the detail of that. Finally, as is often the case, this bill updates the deductible gift recipients list in a number of important respects.

I will deal with the first schedule. The Assistant Treasurer outlined in his tabling speech in some detail the proposed operation of this in schedule 1. As many members will be aware, there are already payments made under the program; I outlined the Better Start for Children with Disability initiative. Those payments are important payments for a range of disabilities, including sight or hearing impairment, cerebral palsy, Down syndrome and a number of others. With respect to eligible children with those disabilities in remote and regional areas, there is an additional payment of $2,000 which is being provided to take account of the additional costs resulting from the distance involved in living in those remote and regional areas. The effect of this schedule is simply to ensure that the additional payment is not subject to income tax. That is the sort of schedule we see in these tax laws amendment bills when important benefits of that nature are provided. Without this schedule, the tax law would automatically tax those additional payments, and this schedule sensibly ensures that the $2,000 payment is exempt from income tax calculations.

The second schedule deals with overseas fly-in fly-out arrangements with respect to fringe benefits tax. Essentially at the present point in time there is an exemption from fringe benefits tax for transport from an employee's usual place of residence to their place of employment, where the employee is employed under what is commonly known as fly-in fly-out arrangements and the usual place of employment is a remote location in Australia or on an oil rig or another installation at sea. The Assistant Treasurer outlined in his second reading speech the intention of this schedule essentially to extend that exemption in the same way where the employee is an Australian resident employed in a remote area overseas under a fly-in fly-out arrangement.

That makes sense. The point we on this side of the House would make is this has been necessitated by an earlier change to the taxation law. That was a change announced and legislated by the government back in 2009. It relates to foreign employment income for Australians working overseas. That change meant that Australians in this circumstance who had been exempt from Australian income tax to a level would no longer be. A corollary of that is because they may have been receiving fringe benefits before and they were not subject to income tax now, under the change to that law, there was the potential for them to be double-taxed. I would commend members who are interested in this point to read the explanatory memorandum which outlines in detail this necessity on page 10 at 2.15:

Such benefits were previously exempt from FBT because no FBT liability arose in relation to benefits provided to employees whose salary or wages were fully exempt from income tax. Removing the income tax exemption for affected individuals has brought these individuals within the FBT regime.

It goes on to outline in great detail how that would occur. At 2.19 on the same page it states:

Double taxation may occur because Australia taxes fringe benefits in the hands of employers, whereas most other countries that tax fringe benefits, tax them in the hands of employees.

Tax law is a very detailed area of law as you would appreciate, Madam Deputy Speaker. But the point from this side of the House is that this is something that the government themselves should have recognised at the time of that change a couple of years ago. I make the point in the House that it is a technical oversight. This oversight was recognised prior to the introduction of this bill. In fact, the announcement of the change was made back in 2010, I believe, by the then Assistant Treasurer. I understand it has taken until now to make it into the tax laws amendment bill. The explanatory memorandum was in a media release on 18 November 2010, when it was announced that there would be this change in a tax laws amendment bill.

As I said at the outset, the final schedule updates the deductible gift recipients list. It adds to that list the New Zealand government's Christchurch Earthquake Appeal Trust and the Cancer Australia Gift Fund. It makes some other consequential changes, including renaming some recipients already on the list. It also repeals some from the list, but only in cases where those names are now redundant and have been replaced by either new names or, in one case I think, a merger of a couple of organisations with the same purpose. The addition of those two to the list is something that all members of this House and the Australian public would welcome. I commend the bill to the House.

Michelle Rowland (Greenway, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to rise in support of the Tax Laws Amendment (2011 Measures No. 6) Bill. This bill delivers a number of different but highly important measures. It will directly assist families dealing with disability. It will ensure certainty for industry regarding the fringe benefits tax. Finally, it adds two new organisations to the deductible gift recipients register for tax purposes. I thank the Assistant Treasurer for all his efforts on these matters and I encourage all members to support this legislation.

First, I want to discuss the importance of this bill with specific focus on schedule 1 which amends the Income Tax Assessment Act 1997 to ensure that the outer regional and remote payment made under the Better Start for Children with Disability initiative is exempt from income tax. This government realises the unfortunate reality that it is harder for families who live in regional and remote parts of Australia and care for a loved one with a disability. It is much harder to visit necessary services in some remote parts of Australia. That is why the government introduced the outer regional and remote areas payment. This means that eligible recipients would receive a one-off payment of $2,000 to help manage the extra logistical difficulties that come with caring for a person with a disability—

(Quorum formed) Madam Deputy Speaker, I was talking about the needs of people with disability and the importance of assisting those people and particularly their carers. Under the current law, payments made to recipients under the Better Start for Children with Disability initiative may be subject to income tax. This bill will ensure that the outer regional and remote payment made under the Better Start for Children with Disability initiative is expressly exempt from income tax.

Schedule 2 of the bill will also provide increased certainty to fly-in fly-out employees working overseas and their employers by exempting transport from the fringe benefits tax.

Finally, schedule 3 amends the Income Tax Assessment Act to update the list of deductible gift recipients.

I would particularly like to spend a bit of time dealing with the issues relevant to schedule 1. On 29 July last year the Prime Minister made a landmark announcement in detailing the Better Start for Children with Disability initiative. As of 1 July this year, eligible children will be able to access a range of early intervention service providers, including speech pathologists, audiologists, occupational therapists, physiotherapists and psychologists.

Early intervention can make a huge difference to the development and lifelong learning of a child with a disability, and access to these services will help better prepare them for school. This initiative will see around 9,000 children of up to seven years of age who have been diagnosed with cerebral palsy, Down syndrome, fragile X syndrome and/or sight or hearing impairments potentially benefit from these measures. Eligible children will have access to a total of $12,000 in flexible funding for early intervention services and will be able to use up to $6,000 in any one financial year.

On top of this, those Australians living in outer regional and remote parts of the country will receive a one-off payment of $2,000 to assist with the extra costs of transport and other expenses that are incurred due to living in remote regions. By amending the Income Tax Assessment Act, the bill will ensure that families receiving the additional outer regional and remote payment under the Better Start for Children with Disability initiative will be exempt from paying income tax on this one-off payment. This government realises the added pressures, financial and otherwise, that many people who are caring for a young person with disability in regional Australia face, and we are legislating accordingly.

Schedule 2 of the bill ensures certainty for employees whose usual place of employment is overseas, specifically where they work at a remote location that is not in a state or internal territory for an Australian employer. This is otherwise referred to as a fly-in fly-out arrangement. In November last year the Assistant Treasurer announced that Australian workers in such arrangements who worked overseas would be treated the same as those in the same arrangement working in Australia. Therefore, the current fringe benefit tax exemption on travel that applies to fly-in fly-out workers in Australia will be extended to Australian workers overseas. This exemption will be backdated to 1 July 2009, when the tax changes to foreign employment income commenced. This exemption provides the certainty sought by industry regarding the fringe benefit tax implications of changes to the taxation of Australian residents employed overseas. This will improve the consistency of treatment and ensure certainty for employees and their employers.

Finally, this bill will add the New Zealand government's Christchurch Earthquake Appeal Trust and Cancer Australia to the list of deductible gift recipients.

I would like to mention a number of examples from my own electorate of Greenway that highlight why it is so important to address the issue of disability, as schedule 1 of this bill certainly does. In my first speech in this place, I made a commitment to try and improve the lives of people touched by disability. During my time here as a member I have been truly moved by the stories and experiences of the many people in my electorate who have a disability or who care for people with a disability. Over the winter recess, I visited a number of disability service providers and families who are caring for loved ones with a disability. Time and again, these people sat down and told me how difficult it is to provide care and support for clients and family members who have a disability.

In June this year, I met local resident Peter Mortimer and his family during a visit to the disability service provider Ability Options in Seven Hills. Peter's 25-year-old daughter, Kate, at the age of six suffered a catastrophic brain injury, causing her profound disability. After living at home with her family, Kate recently moved into a group home and receives support to manage her daily activities through the Ability Options self-managed program. Peter told me how difficult it was for Kate and the rest of his family immediately after Kate's accident and during her formative years, telling me:

Because of Kate's growth and changing posture she has needed six custom-made wheelchairs over her lifetime and these are not something you can just pick off a shelf.

For each new chair we have had to wait on average 18 months for the funding to be approved, for moulds to be taken and for the chair to be made. We even partially funded one of Kate's wheelchairs as we couldn't wait—Kate really needed it for her posture and so she could engage in activities.

Unfortunately, Kate's story is not an uncommon one, and it is exactly why we must do all we can to help Australians who have a disability, especially younger Australians during their formative years.

The Better Start for Children with Disability initiative directly aims to improve the quality of life of young people with disability. This amendment builds on this legislation by easing the financial burden on families living in remote and regional Australia who are raising children who have a disability.

I want to take this opportunity to say that it is crucial we work towards easing the pressures on people with disability and on their carers. In addition to the Better Start for Children with Disability initiative, we must ensure that all Australians with a disability have the care and support they need. That is why I and a number of other members have backed the Productivity Commission's report into long-term disability care and support, and will continue to push for the implementation of a national disability insurance scheme.

I also want to thank the Prime Minister and the Minister for Families, Housing, Community Services and Indigenous Affairs for their support of the Productivity Commission's report. For too long, people living with disability in this country have been treated as second-class citizens. Throughout my electorate, people have contacted me saying we must address these issues.

I am advocating for a comprehensive national disability insurance scheme that will deliver lifetime care and support for people with severe and profound disability, a strong income support system to enable people who cannot support themselves through work to live in dignity and a range of measures to facilitate increased private expenditure.

Only last week I visited Northcott Disability Services, where I met an extraordinary young women named Gretta Serov—and people may have seen Gretta in the Sydney Morning Herald. Gretta has cerebral palsy. She is confined to a wheelchair and cannot speak. She told me her story by communicating through a tablet computer. Gretta told me that an NDIS would 'basically mean I could integrate much more smoothly into the community and it will increase my independence and quality of life by providing much needed support and transport'. Gretta and the Northcott staff also highlighted how pleased they were with the Prime Minister's response to the Productivity Commission's report. Gretta went on to tell me that she is looking forward to attending university to possibly study creative writing. I have no doubt that Gretta will get to university and achieve her goals, but it is up to us to remove the unfair and unequal barriers that currently stand in her way. That is why I support the implementation of a national disability insurance scheme and encourage all members to do the same.

In conclusion, as I said, this bill does three important things. The bill will amend the Fringe Benefits Tax Assessment Act 1986 to exempt from fringe benefits tax the cost of transport for Australian residents travelling to and from remote overseas places of employment, providing certainty to employees and employers. The bill will also amend the list of deductible gift recipients to make gifts to the Christchurch Earthquake Appeal Trust and Cancer Australia tax-deductible. Finally, the bill will ease the financial strain on families in regional and remote parts of Australia who are caring for someone with a disability, by exempting their regional and remote payments made under the Better Start for Children with Disability initiative from income tax. These are the right things to do for our community, and I urge all members to support this bill.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

I rise to lend my support to the Tax Laws Amendment (2011 Measures No. 6) Bill 2011. The bill is not controversial. It is broken up into three segments. The first schedule amends the Income Tax Assessment Act 1997 in order to ensure that certain payments made under the Better Start for Children with Disability initiative are exempt from income tax—and I will expand on the benefits of that later on in my speech. Schedule 2 amends the Fringe Benefits Tax Assessment Act 1986 to exempt from fringe benefits tax the cost of transport for Australian residents travelling to and from remote overseas places of employment. Schedule 3 amends the list of deductible gift recipients, DGRs, in the ITAA 1997 to make gifts to the Christchurch Earthquake Appeal Trust and Cancer Australia tax-deductible. According to the explanatory memorandum, the sole financial implication of the bill is a $0.68 million cost to revenue in the 2011-12 financial year.

Looking at schedule 1 in more detail, the Better Start for Children with Disability initiative, which we refer to as Better Start, provides funding for early intervention for particular disabled children. The aim of the initiative is to intervene early in the lives of such children because intervention at that stage is considered to be more effective than later treatment. In particular, it is hoped that early intervention will prepare this cohort of children for school. The disabilities covered by the initiative are cerebral palsy, Down syndrome, fragile X syndrome, and moderate or greater vision and hearing impairments including deaf-blindness. To be eligible for funding under the initiative, the family must provide evidence of the child's age; a confirmed, written diagnosis of a relevant disability; evidence of residential status; and the child's Centrelink customer number—relatively easy things for parents to comply with. In addition to the general benefits available to all eligible children and their parents and/or carers, those living in remote and regional Australia will also be eligible for a further, one-off payment of $2,000. This is to reflect the additional expenses associated with accessing early intervention services, including travel and home visits. My seat of Wright includes an element of remoteness, so those funds will be well sought after by people in my electorate.

I am sure we would all agree that parents of severely disabled children have one of the toughest gigs in the world. Coping with the additional amount of physical and emotional care is a challenge. Children with disabilities may need regular medical attention, time in hospital or regular therapy in addition to extra care at home. These pressures, the sense of isolation and, indeed, desperation that can accompany high levels of care can place a lot of emotional as well as financial stress on a parent. The difficulties of that responsibility are only magnified if they happen to live in a regional or remote area where access to services and support are naturally harder to come by. In those circumstances, a bit of extra assistance will never go astray. To that end, the amendments contained in schedule 1 will ensure that the outer regional and remote payment will be exempt from income tax. I personally believe these amendments are entirely appropriate for families to whom every extra dollar counts.

Schedule 2 speaks to the overseas fly-in fly-out FBT exemption. The bill gives an exemption from fringe benefits tax for transport from an employee's usual place of residence to their usual place of employment where the employee is an Australian resident employed in a remote area overseas under fly-in fly-out arrangements. Current FBT arrangements expressly exempt transport from an employee's usual place of residence to their usual place of employment, where the employee is employed under what is commonly known as a fly-in fly-out arrangement and the usual place of employment is a remote location in Australia, on an oil rig or on another installation at sea.

As we reflect on the booming resources sector that Australia is incurring at the moment, we have more people who are choosing to reside on the eastern seaboard while there is a greater demand for their skills either in remote parts of Australia or offshore. Schedule 2 extends the exemption to Australians whose usual place of employment is overseas specifically where they work at a remote location that is not in a state or internal territory of an Australian employer.

The extension will apply to fringe benefits provided since 1 July 2009, which is when the foreign employment income of Australian residents became assessable in certain circumstances. Previously, foreign employment income was exempt from income tax paid by the taxpayer if they had been employed overseas for more than 91 days in a continuous period. However, in 2009 the Rudd government tightened the eligibility requirements for the exemption in section 23AG of the Income Tax Assessment Act 1936 so that only foreign income that is 'directly attributable' to particular activities, such as the delivery of Australia's official development assistance or the person's deployment as a member of an Australian 'disciplined force', is exempt.

Since 2009 the foreign employment income of Australians not engaged in any of those specific activities has been subject to Australian income tax. Similarly, any fringe benefits provided by the employer, including fly-in fly-out transport, has also been subject to taxation.

Under the proposed amendments, while foreign employment income will still be subject to Australian income tax, the provision of transport will become exempt from FBT. Extending the exemption will ensure that Australian residents working for Australian employers in remote areas on fly-in fly-out arrangements are taxed consistently, regardless of whether they are working in Australia or overseas, as well as eliminate any possible double taxation on such benefits. The extension of the exemption will only apply to Australian resident taxpayers because foreign resident taxpayers are not taxable in Australia on their foreign sourced income.

This amendment clears up an oversight from a previous tax law change. This is a fairly obvious technical oversight to previous changes that the government should not have allowed to happen in the first place. However, with the number of Australians working under fly-in fly-out arrangements increasing, it is satisfying to see that we are finally rectifying a loophole which unfairly disadvantaged those Australians who operated under similar circumstances in an overseas location.

Schedule 3 speaks to deductible gift recipients. The income tax laws allow income tax deductions for taxpayers who make gifts of $2 or more to organisations registered as deductible gift recipients. To be considered a DGR, an organisation must fall within one of the general categories set out in division 30 of the Income Tax Assessment Act 1997 or be specifically listed by name in that division. DGR status assists eligible funds and organisations to garner public support for their activities.

The amendments in schedule 3 add the New Zealand government's Christchurch Earthquake Appeal Trust, established following the 22 February 2011 Christchurch earthquake, and Cancer Australia to the list of DGRs and makes other minor changes to the DGR listings. Both charities well deserve a place on that register.

In my electorate of Wright, we know a thing or two about natural disasters and we can truly sympathise with the tough time the people of Christchurch have been through over the past six months or so. Recovering from a natural disaster is an ongoing process and no doubt it will be some time yet before the physical and emotional scars have healed. Later this year I look forward to catching up with the mayor of Christchurch to discuss the personal hardship that he went through, similar to that which we went through in the Grantham area. I understand the Earthquake Appeal Trust is doing fantastic work repairing schools, restoring the city's parks and sporting facilities and laying the groundwork for the construction of an interim 'cardboard cathedral' to temporarily replace the iconic Anglican cathedral in the city centre. I know that many Australians have donated generously to their Kiwi cousins and it is only fair that their generosity is acknowledged in this way on this register.

Cancer Australia was established in 2006 to provide national leadership in cancer control and to benefit all Australians, their families and carers who are affected by cancer. The organisation works to reduce the impact of cancer and improve the wellbeing of those diagnosed by ensuring that evidence informs cancer prevention, screening, diagnosis, treatment and supportive care. Everybody knows at least one person who has been tragically touched by cancer and it is the one cause to which almost everyone is happy to donate. For that reason alone, I am happy to see the Cancer Australia gift fund included on the list of DGRs.

In conclusion, the coalition believes the amendments contained in the bill are worth while and, for that reason, it carries my full support.

Deborah O'Neill (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Tax Laws Amendment (2011 Measures No. 6) Bill 2011. This is very important legislation because it seeks to amend various taxation laws and will implement a range of improvements to our current Australian taxation law.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Order! I apologise to the member for Robertson but, it being 1.45 pm, the debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour and the honourable member for Robertson will at that time have an opportunity to continue her remarks.