Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary Assisting the Prime Minister for Social Inclusion) Share this | Hansard source

I thank all senators who have contributed to this debate on the Tax Laws Amendment (2009 Measures No. 1) Bill 2009 and those who participated in the hearings of the Senate Standing Committee on Economics into this bill. This is an important bill and one that the government is keen to see progress because it is part of our agenda to ensure there is consistency and fairness in our tax and transfer system.

The pay-as-you-go amendments contained in schedule 1 to the bill reduce by 20 per cent the PAYG instalment amount payable by certain small businesses for the quarter that includes 31 December 2008. The 20 per cent reduction in the PAYG instalment is intended to ensure that the PAYG instalments payable by eligible small business taxpayers more accurately reflect their expected tax liability based on actual profits for the 2008-09 income year. Let me assure all small businesses that the government is committed to helping them through the global financial crisis. This PAYG instalment reduction is one way of providing immediate and much-needed cash flow relief to eligible small business taxpayers.

Schedule 2, which has generally been considered non-controversial and been supported across the chamber, relates to the broader unclaimed money regimes, making the existing provision in the unclaimed money act more compatible with the new temporary resident superannuation provisions. The amendments also improve the general administration of the unclaimed money regime. This will assist superannuation providers to meet their unclaimed money obligations and make it easier for someone to be reunited with their unclaimed money.

Schedule 3 shows how the government is committed to enhancing the fairness and the integrity of the tax and transfer system. From 1 July 2009 individuals who have access to salary sacrifice arrangements to reduce their taxable income will be treated the same as those who do not have access to salary sacrifice arrangements for the purposes of determining eligibility for certain means tested programs. Salary-sacrificing individuals who benefit from tax concessions will continue to do so; however, those benefits will no longer flow through to the assessment of means tested programs and tax offsets. This ensures that government programs and tax offsets are delivered to those most in need.

I note the opposition have indicated their serious concerns that two employees on similar conditions might be treated differently as a result of this measure. This matter was also raised by the opposition in their additional comments to the Senate economics committee report on this bill. The opposition’s concern is that the definition of ‘reportable employer superannuation contributions’ may contribute an unintended bias as individuals on the same total income may have different RESC amounts, depending on whether their employment conditions are set by a common-law employment contract or an industrial agreement.

I understand, and Senator Coonan has confirmed, that there have been in-depth discussions today between Treasury officials, the Assistant Treasurer’s office and members of the opposition to attempt to resolve this matter. This is a complex and difficult area of tax law, and the government acknowledges that the opposition have raised a very legitimate question. The Assistant Treasurer has asked his departmental officials to seek to examine any possible solution to address these concerns.

Of particular concern to the opposition is the potential for an employee to move from one job to another on the same income but, if the second employer offers only a nine per cent super guarantee whereas the first employer offered a 15 per cent contribution, they may be treated differently. The government has undertaken to examine this issue and determine whether a solution is possible. Can I thank the opposition on behalf of the government for their engagement on this issue and the discussions that have been had in good faith. This is a sensible outcome, given how important it is for both the tax office and Centrelink that this bill, and in particular this schedule, be passed today. The test for determining whether superannuation contributions made by an employer are to be assessed as income is whether the employer had ‘capacity to influence the contribution’. It is not intended that employees be assessed on superannuation contributions over which they have no capacity to influence.

Together, these reforms ensure that the various tax and transfer programs are fairer and better targeted to those in need of government assistance. Can I draw the Senate’s attention to the report of the Standing Committee on Economics, which stated that ‘the relative complexity of the tax and transfer system will be reduced by the proposed measures’.

In relation to the timing of the bill, and the call by the Greens to withdraw schedule 3, I make the point that in April 2009 family assistance customers of Centrelink will be asked to estimate their income for the 2009-10 income year, and they cannot be asked to declare information for something that has not been made into law. So there is a real risk that the bill, as it applies to family assistance payments, might need to be deferred to later income years, and that would actually reduce the expected savings from the reforms. That would put a hole in the budget of $164 million. So it is an important measure and it needs to be resolved today.

In relation to the concerns that Senator Siewert has raised about the perceived adverse impact on the not-for-profit sector, I acknowledge Senator Siewert’s absolute championing of the sector. She is a strong advocate for all things that are in the third-sector space, and I thank and admire her for it. But Senator Siewert suggested that the sector had not been consulted on this. If I can put on the record what actually happened. First of all the government released the discussion paper and the draft legislation for public comment, in November 2008, and it was open for comment for a month. Comments from the not-for-profit sector were specifically sought about the impact of the bill, including from the Australian Council of Social Service, several church organisations including the Salvation Army and St Vincent de Paul, and the body that the ATO uses as one of its most powerful and connected consultative mechanisms, the Charities Consultative Committee—and the sector did not raise any particular issue of concern about the bill.

It is not an issue that has been raised with me, either, so I think the concerns that have been raised overstate the impact that it may have on the sector. I just wanted to ensure that that was on the public record. It seems to me that everyone is very mindful of what happened last year with the changes to the fringe benefits tax and family tax benefit arrangements. Having to fix that in such a hasty manner last year has made everyone more mindful about how there could be unintended consequences of legislation. But this is not, as we perceive it, an unintended consequence that would be of the order that Senator Siewert was referring to. Having said that, I thank everyone for their contributions.

Debate (on motion by Senator Stephens) adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.