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

in reply—I thank all honourable members who have contributed to this debate. Many honourable members, including the member for Bonner, commented on schedule 1, which provides immediate and much needed cash flow relief to many small businesses. Those small businesses that pay four quarterly tax instalments on the basis of GDP adjusted notional tax will have a 20 per cent reduction in the instalment due for the quarter that includes 31 December 2008. These amendments also include a regulation-making power to allow reductions in instalment amounts to be made in the future. This measure is one of a number of government initiatives designed to encourage small business confidence, boost business investment, bolster economic activity and support long-term economic growth in the face of the global financial crisis and the cash flow difficulties created for small business.

Schedule 2 shows the government’s commitment to reducing the number of lost accounts in the superannuation system. The amendments to the unclaimed superannuation legislation last year were targeted at reducing the number of lost and unclaimed superannuation accounts held by departed temporary residents. The amendments contained in this schedule improve the general administration of the unclaimed money regime and align the general regime with the temporary residents superannuation regime. This will assist superannuation providers in meeting their unclaimed money obligations.

The amendments contained in schedule 3 of the bill are designed to enhance the fairness and integrity of the tax and transfer systems. This will be achieved by removing inconsistencies in the treatment of certain non-wage remuneration and taking better account of certain losses. From 1 July 2009, individuals who have access to salary sacrifice arrangements to reduce taxable income will be treated the same as those who do not for the purposes of determining eligibility for certain means tested programs. Salary-sacrificing individuals who benefit from tax concessions will continue to do so. However, these benefits will no longer flow through to the assessment of means tested programs and tax offsets.

I note the comments of the honourable member for Casey with regard to two employees on similar conditions who may be treated differently. This matter was also raised by the opposition in their additional comments to the report on the bill by the Senate Standing Committee on Economics. The opposition’s concern is that the definition of ‘reportable employer superannuation contributions’ may create an unintended bias, as individuals on the same total income may have different reportable employer superannuation contribution amounts depending on whether their employment conditions are set by a common-law employment contract or an industrial agreement. The bill seeks to ensure that only amounts that an individual has elected to be salary sacrificed will be reported for tax and transfer purposes. Where a person has no capacity to influence the amount of superannuation contributions being made on their behalf then the additional amounts will not be assessed for means tested programs. For instance, where a small business employs two individuals and offers each a minimum 15 per cent superannuation contribution as part of the standard arrangements then these amounts would not be reportable employer superannuation contributions. If, however, one individual elects to salary sacrifice an additional $5,000 then this $5,000 would be a reportable employer superannuation contribution and would be taken into account in determining eligibility for tax and transfer concessions. This would apply regardless of whether the individual were under a common-law employment contract or an industrial agreement.

Having said that, can I say I do appreciate the spirit in which the honourable member for Casey has raised this concern. He has raised it genuinely and sincerely. I will reflect further on the opposition’s concerns and will communicate with the shadow Assistant Treasurer before the bill enters the other place as to whether the government intends to take any action in response to those concerns. I also indicate that I would be more than happy to make Treasury officials available to him for further discussions over the parliamentary break before the bill enters the Senate.

The adjusted value of fringe benefits will also be included for the purposes of income where not already included. In addition, net rental property losses will be included in those programs that do not currently include them and expanded to include net losses derived from financial investments such as shares or managed funds.

Dependency tax offsets will be better targeted so that those on high incomes are no longer entitled to claim them. The changes will also reduce workforce participation disincentives that can be associated with the dependency tax offsets. Those earning more than $150,000 will not be entitled to claim the dependent spouse, housekeeper, child housekeeper, invalid relative or parent/parent-in-law tax offsets. The definition of income used in determining eligibility for the offsets will be aligned to that applying to family assistance payments.

Together, these measures will ensure that various tax and transfer programs are fairer and better targeted to those in need of government assistance. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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