Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

I move:

That this bill be now read a second time.

This bill amends various taxation laws to implement a range of improvements to Australia’s tax laws.

Schedule 1 amends section 45-400 of schedule 1 to the Taxation Administration Act 1953 to provide a 20 per cent reduction of the pay as you go instalment for the quarter that includes 31 December 2008 for certain small business taxpayers.

Section 45-400 sets out how the Commissioner of Taxation determines the amount of the pay as you go instalments on the basis of GDP adjusted notional tax for taxpayers who pay quarterly instalments.

The GDP uplift factor used in the calculation can be unrepresentative of expected profit growth in income years where economic and business conditions change quickly. Consequently, this can require taxpayers to pay too much in pay as you go instalments compared with their actual tax liability, with the overpaid tax being refunded to them at the conclusion of the income year when their final tax liability is assessed.

For the 2008-09 income year, the GDP uplift factor is eight per cent while the expected profit growth for the small business sector, as forecast in the recent Mid-Year Economic and Fiscal Outlook, is two per cent. As such, small business taxpayers who pay their quarterly PAYG instalments on the basis of GDP-adjusted notional tax would be required to pay too much throughout the year towards their annual tax liability.

The 20 per cent PAYG instalment reduction will alleviate small business taxpayers of this cash flow pressure in the current economic environment and provide immediate and much needed cash flow relief to small businesses and encourage small business confidence.

To provide flexibility, a regulation-making power will be inserted into the law to allow reductions to be made in the future should that be considered necessary because of changing economic circumstances. Schedule 2 amends various acts relating to temporary residents’ unclaimed superannuation payments.

The government made amendments to the unclaimed money regime last year, to require superannuation funds to pay the unclaimed superannuation of former temporary residents to the Australian Taxation Office. This was done to help reduce the number of lost accounts and unclaimed money in the superannuation system which arises when temporary residents depart Australia without taking their superannuation with them.

Schedule 2 amends various acts as a consequence of the amendments required to support the temporary resident unclaimed superannuation regime, including the income tax legislation, small superannuation accounts legislation, superannuation guarantee legislation and co-contribution legislation.

The amendments also make changes to the broader unclaimed money regime to make the existing unclaimed superannuation provisions more compatible with the provisions for the payment of temporary residents’ unclaimed superannuation to the Australian government. Most of the changes are consistent (in many cases identical) with the requirements for the new temporary residents’ unclaimed superannuation regime.

Without these changes superannuation providers would need to maintain two very different unclaimed money regimes, one for general unclaimed superannuation money, and another for the temporary residents’ unclaimed superannuation.

Apart from the amendments to the co-contribution legislation, the consequential temporary residents’ superannuation amendments will have effect from the day after royal assent. The amendments to the co-contribution will have effect from the 2009-10 income year.

Schedule 3 introduces reforms to income tests which were announced in the 2008-09 budget. The reforms expand income tests used in determining eligibility for a range of government financial assistance programs to include certain salary sacrificed contributions to superannuation, total net investment losses and adjusted fringe benefits.

Affected programs include student financial assistance programs, family assistance payments, income support payments for individuals below age pension age and various means-tested tax benefits. Particular drought assistance payments are specifically excluded.

The reforms also align the income tests used to determine eligibility for the dependency tax offsets with the income test used for family assistance payment purposes.

The measures bring income testing up to date with contemporary remuneration arrangements. In particular, superannuation contributions will be assessed including all deductible personal contributions made by an individual and any employer superannuation contributions made on behalf of an employee that the employee has or has had capacity to influence. An example is contributions made under a salary sacrifice agreement. These contributions will need to be reported on payment summaries from 1 July 2009.

These reforms will provide an overall saving of $545 million over the forward estimates period and will apply to the 2009-10 and later income years.

Full details of the measures in this bill are contained in the explanatory memorandum. I commend the bill to the House.

Debate (on motion by Mr Lindsay) adjourned.

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