Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Hansard source

Firstly I thank those members who have contributed to this debate. The Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015 is part of the government's plan to modernise and update Australia's tax and superannuation laws. The bill makes three changes: two to our tax law and one to our superannuation law. The two tax changes are part of the government's concerted effort to make our tax system fairer and more robust. We want to make sure that everybody pays their fair share of tax and that there are no loopholes in our tax system that allow an unfair advantage to some over others. These two tax changes are integrity measures that will remove the ability of certain companies, trusts and individuals to obtain an unfair tax advantage that was never intended for them. This will make our tax system harder to circumvent and more sustainable for the future. The superannuation amendment in this bill is about making sure that people's superannuation money is protected from erosion by fees and charges, including insurance premiums, so that it is available to them when they retire. These three amendments demonstrate the government's commitment to tax and superannuation systems that are fairer, more sustainable and more robust.

Schedule 1 to this bill will improve the integrity of the rules that deal with scrip for scrip rollovers. The rules apply where shares or interests in a company or a trust are exchanged for similar shares or interests as part of a merger or takeover. The tax payable on the disposal of the original interest when it was exchanged is deferred. Special integrity rules exist to ensure that tax relief is not provided where an entity has a controlling interest in both the entity acquiring and the entity being acquired. This schedule strengthens those rules to ensure that they operate as intended. These new rules overcome a decision in the full Federal Court of Australia which highlighted that there were problems with the rules that allowed entities to access the rollover in circumstances which were outside the policy intent. Schedule 1 to this bill will amend the special integrity rules to ensure that these rules cannot be bypassed, by changing certain definitions and introducing new integrity rules which target the inappropriate deferral of tax. It also ensures that equivalent rules apply to trusts.

The second amendment in this bill, schedule 2, will eliminate an income tax exemption for certain government employees who work overseas. This income tax exemption is available to certain groups of Australian residents, including government employees who deliver official development assistance for more than 90 days. The exemption was originally designed to make sure that Australians were not subject to double taxation on their foreign employment income; however, it no longer serves this purpose. Instead it now acts as a tax break for some government employees, who are able to avoid income tax altogether. This income tax exemption was never intended to provide full relief from income taxation, so it is currently providing an unintended benefit to eligible Australians. This bill will ensure that government employees who earn income while delivering official development assistance will be liable to pay income tax in Australia. This amendment will not affect defence or police force personnel or employees of private sector or charity organisations delivering official development assistance. This tax change will commence from 1 July 2016 and result in a gain to revenue of $6.7 million over the forward estimates.

The third and final amendment in this bill will help ensure that lost member superannuation accounts with small balances are not eroded by fees, charges and insurance premiums, which can often exceed investment returns on such accounts. Generally lost super is a super account where either the fund has lost contact with the member or the account has been idle for more than five years. Transferring these lost super accounts with low balances to the ATO helps protect them from fees and charges, including insurance premiums, and preserves their value until they can be reunited with the member. The ATO does not charge any fees for maintaining these accounts, pays interest calculated in accordance with the consumer price index and ensures that the electronic process to reunite members with their lost super accounts is quick and easy. Currently, lost member super accounts with less than $2,000 must be transferred from funds to the ATO as unclaimed superannuation money. This bill will increase the $2,000 threshold in two phases—first to $4,000 from 31 December 2015 and then to $6,000 from 31 December 2016. The threshold increase recognises the significance of protecting superannuation savings for the purpose of retirement income.

This measure, as well as the two tax measures contained in this bill, will modernise our tax and superannuation law and make the overall system fairer and more sustainable for all Australians. It is not fair for some companies or individuals to obtain a tax benefit that was never intended to be there in the first place. And it is not fair that money put away into superannuation for a person's retirement is not protected and available to them when they finally reach retirement. That is why this bill will remove unintended tax benefits that have arisen and protect the superannuation accounts of those with low balances. These important changes will result in a fairer and more sustainable system. I commend this bill to the House.

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