Janelle Saffin (Page, Australian Labor Party) Share this | Hansard source

I speak in support of the Tax Laws Amendment (2009 Measures No. 1) Bill 2009. This bill amends the taxation laws in three principal ways to give effect to a number of policy decisions and budget measures. Seminally, it gives effect to the impact on small business of the global financial crisis and global recession. We know that small business is the backbone of a large part of our economy. In my electorate of Page there are over 10,000 known small businesses—that is, registered ones, so we can imagine how many more small businesses there would be if that many are registered. That certainly forms the backbone of our local regional economy. The small business measure in the bill is particularly important to give some relief to small business in these times. We know that one of the biggest complaints and common refrains from small business is about compliance—not the fact of it, because we all know that we have to have compliance, but the burden of it. This government has recognised that and is making changes already to lessen the compliance burden on small businesses, as well as other changes.

The Minister for Small Business, Independent Contractors and the Service Economy convened a round table discussion with the banks on 6 March to talk directly with them about access to credit for small businesses. Small businesses in my area as well had come to me and talked about a tightening of their access to credit. We found that there had not been a tightening per se; there had actually been an increase in credit going to small business. But we found in some of the regions—like in my seat of Page—that it had not been going there. There seemed to be nervousness on the part of the banks about extending credit to the small businesses. That is one of the things that has been corrected by the minister. The minister also, sensibly, set up his office as a clearing house so that complaints or issues arising could go directly through his area. As a result, there has been relief for small business in quite a few areas.

I will now turn directly to the three amendments, marked as schedules 1, 2 and 3, in this bill. I will address them seriatum, setting out their practical and legislative effect and noting some points about the importance of those three. Schedule 1 gives effect to the government’s December 2008 announcement to provide relief to small businesses by reducing their PAYG instalments for the February quarter. The bill amends the Taxation Administration Act 1953, which sets out how the Commissioner of Taxation works out the amount of pay-as-you-go—PAYG—instalments on the basis of the GDP adjusted notional tax for taxpayers who pay quarterly instalments. The amendments will provide for a 20 per cent reduction of the amount of the PAYG instalment worked out under section 45-400 for the quarter that includes 31 December 2008 for certain small business taxpayers. There is also a regulation-making power to allow the amount of the PAYG instalment, worked out under the respective section that I have just cited, to be reduced in the future in circumstances specified by the regulations.

The announced 20 per cent PAYG instalment reduction measure for small businesses broadly represents a reduction in average instalments necessary in a single quarter to reflect the expected slowing in small business profit growth for the 2008-09 income year. It is a further example of the decisive action taken by the government to assist small businesses to weather the global financial crisis, and we know that we cannot stop some of the impacts of the global financial crisis—as the Prime Minister says, it is like a global cyclone—but we can batten down the hatches, be prepared and give some protection against the impact that it will have. The 20 per cent cut in the February instalment will provide immediate and much needed cash flow for small businesses and that is a priority. It is a priority at all times and it is even more of a priority in the times that we are facing. The measure will offer relief to around 1.3 million small businesses with aggregated turnovers of $2 million per annum or less. That is a significant number of small business operators who contribute a significant amount to our economy.

Schedule 2 makes the general unclaimed superannuation money regime more consistent with the temporary resident unclaimed superannuation money regime and other consequential amendments as a result of the payment of temporary residents’ superannuation to the Australian government. The government made amendments to the unclaimed superannuation legislation last year in order to reduce the number of lost accounts and unclaimed money in the superannuation system, a situation which arises when temporary residents depart Australia without taking their superannuation. Some people might say, ‘So what?’ But it is a big problem and it is a problem that has gone unchecked for a long time. It is an issue that needed to have some action taken around it so that it could be brought into the framework of superannuation.

The bill will also amend various acts to support the temporary resident unclaimed superannuation regime, including the income tax legislation, small superannuation accounts legislation, superannuation guarantee legislation and co-contribution legislation. It also makes changes to the broader unclaimed money regime, and it will be more compatible with the temporary resident unclaimed superannuation. The changes will also avoid the need for superannuation providers to maintain two very different unclaimed money regimes and facilitate the administration of the general unclaimed superannuation money regime. That is an important point because we are talking about administration and the compliance. As I said earlier in my speech, one of the issues that small businesses are always seized with is the burden of compliance, and anything that can be streamlined is a welcome change.

Schedule 3 gives effect to reforms to income tests announced in the 2008-09 budget. With effect from 1 July 2009 the reforms amend relevant income tests in the tax and transfer system to include certain salary sacrifice contributions to superannuation, to be known as reportable superannuation contributions, net financial investment losses and adjusted or non-gross fringe benefits. This bill, in the area of schedule 3, gives effect to four budget measures which I will turn to later. The measures enhance the fairness and integrity of the tax system by removing inconsistencies in the treatment of non-wage remuneration and will provide certain savings with the budget measures over the four years.

Under schedule 1, which is the PAYG instalment reduction for small business, the announced 20 per cent PAYG instalment reduction measure broadly represents the reduction in average instalments necessary in a single quarter to reflect the expected slowing in small business profit growth for the 2008-09 income year. It will provide immediate and much needed cash flow relief to small businesses and encourage small business confidence. That is important because, in times when we are facing global financial crisis and global recession, business confidence obviously suffers. We, as government and as members of parliament, have to do everything we can to ensure that that business confidence stays up, even facing the situation that we do, but at the same time we have to speak very frankly with Australians and small businesses about the situation that they are facing. This measure can add to that small business confidence by encouraging it, and indeed it will.

The regulation-making power will build more flexibility into the law to allow the instalments calculated on the basis of GDP adjusted notional tax to be reduced in the future—and that is important—and, in circumstances that will be specified by the regulations, to more accurately reflect changing economic circumstances. Small business taxpayers who will be eligible for the reduction are small business entities, a partner in a partnership that is a small business entity or a beneficiary of a trust that is a small business entity for either the 2007-08 income year or the 2008-09 income year. Broadly, an entity is a small business entity for an income year if it is carrying on a business for the income year and its aggregated turnover is less than $2 million for the previous income year or is likely to be less than $2 million in the current income year.

On schedule 2, with unclaimed superannuation money, one of the key points is that the amendments will contribute to the co-contribution legislation but will also, importantly, make sure that there will not be any need for the businesses to maintain those two very different unclaimed money regimes. So, apart from the other changes they introduce, that one is really important given the nature of small business. With those comments, I commend the bill to the House.

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