Dan Tehan (Wannon, Liberal Party) Share this | Hansard source

I can reassure the member for Parramatta that this government is about letting business get on with their work and lowering the barriers to growth. That is our focus. It is about reducing taxation. It is about reducing regulation. It is setting our economy up for the 21st Century through the negotiation and finalisation of three free-trade agreements, two of which have now been entered into law and one, we hope, the other side will get out of the way and let us get on with that one as well so we can continue to set this economy up for the 21st Century. The Labor Party do not believe in a 21st Century economy; they believe in a 20th Century economy. We want to make sure that we set this country up for the future. That is what these amendments do to this TSLAB No. 4. It requires the government to tidy and trim the laws around taxation, keeping and maintaining an efficient and fair system for all Australians.

This bill will put in place a number of changes from taxation exemptions to superannuation. Firstly, the government is moving to keep a more common-sense approach to Australia's merger and acquisition laws. They are doing this under schedule 1, which is about improving the integrity of scrip for scrip rollover. What does this mean? This measure strengthens the integrity in the scrip for scrip rollover rules to ensure that they are better targeted and work as intended.

Subdivision 124M of the Income Tax Assessment Act 1997 contains the scrip-for-scrip rollover rules, which provide tax relief in certain merger and acquisition transactions. A scrip-for-scrip rollover is available for restructures where an entity or individual exchanges original shares or interest it holds in an entity for new shares or interest in another entity. The scrip-for-scrip-rollover aims to ensure that tax considerations are not an impediment to mergers and acquisitions of companies and trusts. The scrip-for-scrip rollover operates to defer the tax otherwise payable on the exchange of the original shares and interest until such time as the new shares or interest are disposed of. Integrity measures exist to ensure that tax payable is not deferred indefinitely. Tax relief will not be available where the same person or entity controls both the acquiring entity and the entity being acquired.

What, in short, will this mean? It will mean that we see an improvement in the integrity of the system by removing the ability for some entities to access tax relief from the Australian taxpayer when two merging companies are owned by the same people or business. It does this by making definitions clearer and that the integrity structure cannot be circumvented by businesses, trusts or companies. These changes will make our system stronger and easier to understand. Common sense for businesses will create growth and jobs for the economy.

Another amendment implemented by this bill is the tightening of income tax exemptions for some employees who are working overseas. Employees of an Australian government agency who work overseas for more than 90 continuous days delivering official development assistance will no longer be able to claim an income tax exemption on the income they earn delivering official development assistance overseas. This amendment is estimated to result in a revenue gain of approximately $6.7 million over the forward estimates. When will this change take effect? The amendment will apply from 1 July 2016, commencing in the 2016 income year. It will make it clear that no Australian Defence Force or Australian Federal Police personnel access an income tax exemption under a different provision in the income tax law, and that provision will not be affected by this amendment.

Currently, this exemption can be used for Australian public servants or government employees who operate overseas for more than 90 days. Originally, the exemption was aimed at preventing double taxation where a worker was going to be caught by taxation at home and overseas. However, these situations no longer apply for these workers. What it has become is a tax break for many Australians who will not pay income tax to Australia or the country in which they are working. This is something that the government is looking to close down, as Australians expect all to pay their fair share in tax. I am sure this is something which is shared on all sides of the House. The changes will come into effect from 1 July 2016 and it is expected to provide, as I mentioned before, $6.7 million over the forward estimates. I reiterate, the government would like to make it clear that these changes to the overseas income tax exemption laws will not affect any members of the Australia Defence Force, Australian Federal Police or private charity and aid workers.

The final change being made by these amendments is to the laws around lost superannuation accounts. The ATO has shown that 45 per cent of working Australians have more than one superannuation account. This measure will increase the superannuation account balance threshold below which lost member accounts are transferred to the ATO as unclaimed superannuation money. For super accounts with smaller balances, fees and charges can exceed any investment earnings, leading to erosion of the account balance. This can be particularly problematic for lost super accounts because, in most cases, the members are not aware that they have these accounts and can end up losing money through fee erosion—money that was meant for their retirement. Transferring lost super accounts with low balances to the ATO helps protect these balances and preserves their value until they can be reunited with the member.

This measure was first announced by the former government in the 2013-14 budget. On 6 November 2013, the government announced that it would enact the measure. The government's decision to proceed with the increase to the small or lost member superannuation account threshold is a sensible measure and one which, I think, shows that when members opposite put forward proposals that we think have some merit, we are prepared to look at them and make sure that there are no unintended consequences—not something that the opposition were very good at when they were in government. We have learnt from that. We have looked very closely at where things have been proposed and where we think there are no unintended consequences we have decided to act, and this is what we have done in this situation.

This is simply a by-product of the transition that Australians make between jobs: new accounts get set up and old accounts forgotten. We know that many Australians—up to 70 per cent—simply sign up to a default provider of their employer. Often these forgotten accounts can have substantial amounts of money and every penny counts when it comes to super and your retirement. If you are hanging onto this money and putting in super, obviously you are doing so for 10 or 20 and sometimes 30 years. So every extra dollar that you can save over time obviously adds up and can be worth a substantial amount to you when you finally access your retirement savings.

Currently, these forgotten accounts will be transferred to the ATO for safekeeping after five years if the provider has lost contact with the account owner and the account has less than $2,000.

The benefit of the account being transferred to the ATO is that it can then be held until the original owner is found. While the ATO holds the account, they are not being charged fees or premiums, which ultimately can whittle down these savings. More importantly, the ATO will pay a reclaimed account with interest in line with CPI. I think that is worth reiterating: the ATO will pay a reclaimed account with interest in line with CPI. So, not only are we preserving the superannuation amount and protecting it from freeze, but if the resultant person is found and can be linked back to their superannuation account then the ATO will pay a reclaimed account with interest in line with CPI.

However, $2,000 is quite a small amount as a threshold. Under these changes, the amount will gradually move to $4,000 and then $6,000. This move will mean that more of these forgotten accounts can be captured and held until they find their owner again. This change is complemented by the six other measures that will reduce red tape for superannuation funds by removing redundant reporting obligations and by streamlining some of the lost and unclaimed superannuation administrative arrangements. These include: updating the definition of 'uncontactable' to account for contemporary forms of member communication, for example online communication; supporting eligible rollover funds proactively consolidating lost accounts; and allowing direct payments of lost super held by the ATO to persons with a terminal illness. These changes will make it easier for individuals to be reunited with their lost and unclaimed superannuation.

The ATO has a range of strategies in place which aim to reunite members with lost and unclaimed superannuation accounts and reduce the number of unnecessary and inactive accounts in the superannuation system. So, once again, this is not just about shepherding these superannuation accounts to the ATO; it is also making sure the ATO has a range of strategies to reunite people with their money, because it is a priority of this government to reunite as many people with their money as possible—to get government out of their lives and to reduce the taxation and regulation burden on them.

Some of the strategies are matching superannuation accounts to an individual, providing this information on an online portal, and proactively working with super funds to ensure they have updated addresses and contact details for their lost members. The ATO in this plays a valuable role. As I have already outlined, they can save the superannuation account from being eaten by fees and charges while it has been abandoned, but they are also the organisation who can keep track of the health of Australia's superannuation system. By having the ATO as the guardian of forgotten accounts, they can assess the amounts that Australians are leaving in these accounts when they move on.

It gives the government and the tax office an indication as to which demographic are forgetting about super and as a result which group of Australians might be at risk from losing their super. Then we can sensibly just use information campaigns to ensure that that group of people understand the importance of superannuation, ensure they keep contact with their superannuation accounts and, if necessary, especially if they are changing from one job to another, ensure they keep rolling their superannuation over into the one account. This information can then be used to target them through ad campaigns, super education initiatives and so on in order to ensure that Australians are getting the most out of what they put into superannuation.

The amendments in the bill are a reflection of this government's commitment to sound economic management. That is something which will be music to the ears of many Australians who saw the disasters of the unsound economic management that took place under the stewardship of the former Labor government. These are sensible changes. There may not be any photo opportunity here for members; that is what seemed to dictate those opposite but it is not what dictates here. We just want to make sure that we are doing the best thing for Australians and their money. This is the work that we need to continue to do to keep Australia running well.

Maintaining our taxation system so that it is built on common sense and works for Australians is key to good government. Maintaining our superannuation system so that it is built on common sense and works for Australians is also key to good government. Under the stewardship of the Prime Minister, the Treasurer, the Assistant Treasurer and the Parliamentary Secretary to the Treasurer, what we are seeing is a sound and sensible approach to making sure our taxation system and our superannuation system works for all Australians.

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