Thursday, 8 October 2020
Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020; Second Reading
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
The speech read as follows—
This Bill implements the Morrison Government's tax plan for Australia's economic recovery from COVID-19 announced last night by the Treasurer.
The Bill delivers lower taxes for individuals and businesses. It will stimulate demand, support investment, boost economic growth and most importantly, create jobs.
These measures are central to the Government's JobMaker Plan.
First, we are lowering taxes for more than 11 million individuals who pay personal income tax.
These tax cuts support low and middle-income Australians, with the majority of the benefit in 2020-21 being received by those on incomes below $90,000. In 2020-21, low and middle-income earners will receive tax relief of up to $2,745, for singles, and up to $5,490, for dual income families, compared with 2017-18 settings.
Over the next 12 months, personal income taxes will be cut by $12.5 billion. Taxes will be cut by $17.8 billion over the next four years. With more money in their pockets, Australians can spend more in our economy, boosting demand and jobs.
Personal income taxes will be cut by bringing forward the second stage of the Government's Personal Income Tax Plan by two years to this financial year. This involves increasing the top threshold of the 19 per cent bracket from $37,000 to $45,000 and increasing the top threshold of the 32.5 per cent bracket from $90,000 to $120,000. Under stage two, the low income tax offset increases from $445 to $700, which will deliver more money into the pockets of some of the lowest income earners.
The Government will also provide an additional low and middle income tax offset, worth up to $1,080, in 2020-21 that would have been removed under stage 2.
It all forms part of our plan that ensures that by 2024-25, around 95 per cent of Australian income earners pay no more than 30 cents in the dollar, on every dollar they earn.
Not only do we need more Australians with more money in their pockets out spending, we also need to back businesses that have a go.
The COVID-19 economic recovery will be driven by the private sector. Eight out of ten jobs are private sector jobs.
That is why our Economic Recovery Plan includes substantial incentives for businesses to invest. This Bill will provide 99 per cent of businesses access to temporary full expensing until 30 June 2022. This will reward business for bringing forward investment. Businesses with a turnover of up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are first installed. Whether it is a farmer investing in a tractor, a café in a new coffee machine, a manufacturer in new machinery or a services business in IT software, these investments will boost their productivity and boost our economy. With more investment, there is more work to do and with that comes more jobs along the supply chain.
We know that there are many businesses, which were sound businesses before COVID-19, are now in a loss making position. Under this Bill, companies with a turnover of up to $5 billion will be able to apply their losses against profits taxed in a previous year as far back as the 2018-19 income year. This temporary measure will be available until 2021-22. It will allow these companies to access cash by using their losses now, to stay in business, rebuild and invest, rather than waiting until they return to profit.
Also in this Bill, the Morrison Government will invest a further $2 billion in Research and Development through the Research and Development Tax Incentive. Business investment in R&D is central to the development of new products, processes and services that will help make Australia more competitive. Investing in R&D provides jobs now and jobs for tomorrow.
The Bill implements measures contained in existing legislation before this Parliament, with several enhancements. The enhancements increase the tax offset rates for all claimants of the R&D Tax Incentive compared to the 2019 Bill, remove the $4 million cap on annual cash refunds, streamline the intensity test from three to two tiers, and defer the start date of the changes to 1 July 2021.
And we know small business is the engine room of our economy. Under this legislation businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, have access to up to ten small business tax concessions.
This will cut their red tape, improve their cash flow and allow them to spend more time on their business than with the tax office. The changes are estimated to support around 20,000 businesses and their employees.
These tax cuts and business incentives are all about delivering money into people's pockets, getting the economy going as we recover from the unprecedented impact of the COVID-19 pandemic, and getting people back into jobs.
Treasury estimates measures in this Bill will create an additional 100,000 jobs by the end of 2021-22.
Full details of the measure are contained in the Explanatory Memorandum.