Thursday, 1 August 2019
Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019, Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2019; Second Reading
That these bills be now read a second time.
I seek leave to have the second reading speeches incorporated in Hansard.
The speech es read as follows—
This Bill contains a package of important measures designed to improve the integrity of Australia's tax system, save businesses time and money through implementing an electronic invoicing framework and protect workers' superannuation.
Schedule 1 to the Bill improves the integrity of the tax treatment of concessional loans made to a tax exempt entity that is privatised, by removing inappropriate tax deductions which arise on the repayment of loan principal, for certain privatised entities.
Schedule 2 to the Bill will ensure partners in partnerships cannot inappropriately access the small business capital gains tax concessions when they alienate future income from the partnership. Partners will now only be eligible for the concessions when such rights make the assignee a partner in the partnership.
Schedule 3 to the Bill is an integrity measure that will deny deductions for some taxpayers for expenses associated with holding vacant land. These amendments will improve the integrity of the tax system by tightening the link between claiming deductions for holding vacant land and earning assessable income, and will apply to the 2019-20 income year and future years.
Schedule 4 to the Bill will extend to family trusts a specific anti-avoidance rule that applies to other closely held trusts that engage in circular trust distributions. This will better enable the ATO to pursue family trusts that engage in these arrangements.
Schedule 5 to the Bill amends the Taxation Administration Act 1953 to allow the ATO to disclose to credit reporting bureaus, the tax debt information of businesses that have owed the ATO at least $100,000 for more than 90 days and have not effectively engaged with the ATO to manage their debt. This measure will encourage businesses to engage with the ATO and repay their debt in a timelier manner.
Schedule 6 to the Bill amends the Taxation Administration Act 1953 to allow the ATO to implement an electronic invoicing framework – known as e-Invoicing – in Australia.
Schedule 7 to the Bill protects hard working Australians' superannuation by closing a legal loophole which has been used by some unscrupulous employers to short-change employees who make salary sacrificed contributions. The changes will:
Full details of the measures are contained in the Explanatory Memorandum.
Everyone needs to pay their fair share of tax to ensure the Government is able to fund the vital infrastructure and services that Australians deserve. Most taxpayers pay their way, but integrity rules are necessary to ensure those taxpayers that don't are caught, and made to pay their due.
Thanks to the work of the Coalition government, Australia has some of the strongest rules in the world to combat tax avoidance, but more can be done to make sure multinationals pay their fair share of tax.
Schedule 1 to the Bill introduces new provisions to improve the integrity of Australia's thin capitalisation rules.
These rules prevent multinationals from shifting profits offshore by having unrealistically high levels of debt in Australia in order to claim excessive interest deductions.
The Bill strengthens the integrity of the thin capitalisation rules by improving the reliability of asset valuations used to support debt deductions. It does this by requiring multinationals to rely on the asset values that they publish in their financial statements. This will remove the ability for multinationals to adopt a special valuation solely for tax purposes. The Bill will also remove the ability for multinationals to justify their debt using assets that cannot be recognised for accounting purposes.
No new revaluations are allowed after 7.30PM on 8 May 2018. To allow companies to adjust to the changes, transitional rules will allow companies to rely on asset valuations that were made prior to this time until the last day before the start of their income year commencing on or after 1 July 2019.
The Bill also amends the income tax law to ensure that all foreign controlled consolidated groups are recognised as inward investing entities, even if they have foreign operations. This will confirm that these entities are not able to use thin capitalisation tests that are only appropriate for outbound investors.
Schedule 1 to the Bill will ensure that multinationals cannot structure to avoid our tax integrity rules which are among the strongest in the world.
These changes build on the already strong arsenal the ATO has to deal with multinational tax avoidance, which include the Diverted Profits Tax, the Multinational Anti-Avoidance Law and the Tax Avoidance Taskforce.
Schedule 2 to the Bill levels the playing field for hotel bookings in Australia by ensuring offshore sellers of Australian hotel accommodation calculate their GST turnover in the same way as local sellers from 1 July 2019.
This measure follows the Government's decision to extend the GST to digital products and other services from 1 July 2017 and to low value imported goods from 1 July 2018.
Schedule 3 ensures luxury car tax is not payable on cars that are re-imported into Australia after being refurbished overseas. It will mean that, from 1 January 2019, the same tax treatment will apply to luxury cars, irrespective of where the car is refurbished.
This Bill will help ensure taxpayers pay their fair share of tax, close loopholes and ensure programs delivered through the tax system give the greatest returns for taxpayers, demonstrating the Government's commitment to continually strengthening our tax system.
Full details of these measures are contained in the Explanatory Memorandum.
Ordered that further consideration of the second reading of these bills be adjourned to the first sitting day of the next period of sittings, in accordance with standing order 111.
Ordered that the bills be listed on the Notice Paper as two separate orders of the day.