Richard Colbeck Tasmania, Liberal Party
2:45 pm
My question is to the Minister representing the Prime Minister, Senator Wong. Minister, how much of the $4.4 billion a year in revenue from the trust tax comes from small business, including farming businesses?
Penny Wong SA, Australian Labor Party, Minister for Foreign Affairs
As I indicated to your colleagues in earlier questions, first, farm income is exempted. That's the first point. I know that Senator McKenzie wants to sigh loudly, but that is the reality. Secondly, the majority of small businesses—about 90 per cent—will not be affected in any given year. I would also make the point that I made in an earlier answer that the number of trusts has more than doubled in the last 20 years. The majority of trust income flows to the top earning 10 per cent of families.
Richard Colbeck Tasmania, Liberal Party
I have a point of order on direct relevance. It was a very tight question. I wanted to know how much of the $4.4 billion revenue comes from small businesses, including farm businesses.
Sue Lines President
I think the minister is being relevant to your question. I'll continue to listen carefully.
Penny Wong SA, Australian Labor Party, Minister for Foreign Affairs
As I said, more than 90 per cent of small businesses are not affected in any given year. I appreciate your focus on the 10 per cent that are; you're entitled to focus on that, just as the government is entitled to ensure that we bring reforms that better align the treatment of income from assets with the treatment of income from labour and provide a wage a tax break—
Michaelia Cash WA, Liberal Party, Leader of the Opposition in the Senate
Again, President, it is relevance. This question is specifically drafted in relation to those who are affected by the change.
Sue Lines President
I'll continue to listen carefully, but the minister is being relevant to the question.
Penny Wong SA, Australian Labor Party, Minister for Foreign Affairs
In terms of those who are affected, about 95 per cent of tax filers do not receive discretionary trust distributions; five per cent do. It is about 810,000 people, I think, in 2022-23. On average, families with discretionary trusts in that year face an average tax rate about four percentage points lower compared with similar families. What I would say to you, Senator, is that I'm sure you can, through estimates, unpack where the revenue is coming from. I would make the point that this change does not start till 2028. Let's remember that they are arguing for the 10 per cent; we are arguing for the 90 per cent. That is the truth of this discussion. They are arguing for the 10 per cent, and we are ensuring that, by doing this, we deliver a tax cut for Australians everywhere. (Time expired)
Richard Colbeck Tasmania, Liberal Party
2:48 pm
Minister, yesterday, you repeatedly said that farm income is exempt from the government's new taxes on business. Can you confirm whether that exemption covers farming businesses that receive income from contracting services, say, to shear sheep, muster cattle, spray crops or bale hay?
Penny Wong SA, Australian Labor Party, Minister for Foreign Affairs
2:49 pm
First, I'd make the point that that is the government's position and that is what is outlined in the budget. Farm income will be exempt from the changes we will introduce for the tax arrangements for discretionary trusts. I cannot give advice on everybody's tax position or tax arrangements, but I can indicate to you that the overwhelming majority of small businesses and families do not have the tax advantages that you are defending.
Richard Colbeck Tasmania, Liberal Party
2:50 pm
Minister, can you confirm that there are more than 37,000 trusts operating across agriculture, fisheries and forestry? How many farm businesses with trusts have diversified income not covered by the exemptions?
Bridget McKenzie Victoria, National Party, Shadow Minister for Infrastructure, Transport and Regional Development
Great question.
Sue Lines President
Senator Mckenzie, you are being really unhelpful, and I would ask you to be quiet.
Penny Wong SA, Australian Labor Party, Minister for Foreign Affairs
(): I would make the point that there are 2.7 million small businesses in Australia. The overwhelming majority of them—
Unidentified interjection - Hansard doesn't record who said this
Opposition Senators:
Opposition senators interjecting—
Sue Lines President
Order! My goodness! I feel like I'm playing a game of whack-a-mole. I get one senator quiet and another one pipes up. Senator Colbeck?
Richard Colbeck Tasmania, Liberal Party
Again, it's on direct relevance. My question was very—
Unidentified interjection - Hansard doesn't record who said this
Opposition Senators:
Opposition senators interjecting—
Sue Lines President
Sorry, Senator Colbeck. I'm going to ask for silence across the chamber. Order! Order across the chamber!
Unidentified interjection - Hansard doesn't record who said this
Hon. Senators:
Honourable senators interjecting—
Sue Lines President
Order! I thought perhaps, again, the silence might remind you that we're in question time. If you want to chat, go outside. Senator Colbeck was on a point of order, and I had to sit him down because of the disruptions. I'm very sorry, Senator Colbeck. Your point of order?
Richard Colbeck Tasmania, Liberal Party
The words 'small business' were not in my question anywhere. It was about farm businesses. On direct relevance—
Sue Lines President
Senator Colbeck, as you as you well know—my goodness! Senators Watt and McKenzie, I invite you to take your interjections out of the chamber. Senator Colbeck, the minister is being relevant to your question, and also I have reminded you previously—perhaps not you but the chamber—that a point of order is not an opportunity to make a statement. Please continue, Minister.
Penny Wong SA, Australian Labor Party, Minister for Foreign Affairs
It is really interesting, isn't it, that the Liberal Party don't want to talk about small business. I thought you were the champions of small business—and he's doing it again.
Richard Colbeck Tasmania, Liberal Party
It's a point of order on direct relevance. My question was about farm businesses. I wasn't asking about anybody else. I was asking about farm businesses.
Sue Lines President
The minister had just risen to her feet. I'm not going to rule a point of order at this point. Minister Wong, please continue.
Penny Wong SA, Australian Labor Party, Minister for Foreign Affairs
I have already explained to you that farming income is exempt from the changes which are introduced. But I would say about the political approach of those opposite—they are for the small minority of businesses who will be affected by this change, and they are against the millions of working Australians who will get a tax break. That's the reality. That is the reality of the political position that those opposite are taking.