Kelly O'Dwyer (Higgins, Liberal Party, Minister for Small Business) Share this | Hansard source

Excessive and unnecessary regulation reduces productivity and investment, stifles job creation, creates uncertainty and saps confidence. Achieving a reduction in regulation across the economy represents an enormous opportunity to increase Australia's productivity and competitiveness.

In 2013, the government made an election commitment to cut red-tape costs by $1 billion a year to improve our nation's competitiveness, help to create more jobs and lower household costs.

This target has now been well exceeded, with the government announcing more than $2.45 billion in regulatory savings, just two years after election.

The Treasury portfolio has delivered some big reforms, including recent reforms from the Australian Securities and Investments Commission (ASIC) to facilitate business to take up digital disclosure, leading to an annual saving of $299 million, and the Australian Taxation Office upgrade of ATO online, providing access for business to manage their tax affairs in a digital environment. Upgrades to the online portal are estimated to have an annual saving of $109 million.

But we have not just delivered reforms for big business.

For example, the changes to Pay As You Go instalment system entry thresholds removed an estimated 447,000 small businesses from the system.

From 1 July 2015, we expanded access to the Small Business Superannuation Clearing House. This change means an additional 27,500 employers can now use this free service to pay their employees' superannuation. Using the free clearing house service saves small business time, and reduces their paperwork.

The reforms through the new franchising code we introduced on 1 January 2015 will deliver an estimated $8.6 million per year in red-tape savings across the sector.

The $5.5 billion Growing Jobs and Small Business package in this year's budget builds upon these initiatives.

The package allows for all small businesses to immediately deduct every eligible asset costing less than $20,000 purchased between budget night and the end of June 2017.

It also includes lower taxes for all small businesses, with a 1.5 percentage point cut to the company tax rate for small companies and a five per cent tax discount for unincorporated entities. Providing small businesses with a reduced rate of tax enables them to retain more earnings and improve their cash flow—a critical issue for small businesses' survival and success.

This bill forms part of the government's commitment to repeal counterproductive, unnecessary and redundant legislation.

Schedule 1 to this bill amends the Superannuation Guarantee Administration Act 1992 to simplify the superannuation guarantee charge and makes the superannuation guarantee charge and penalty more proportionate to the non-compliance. This is a tax imposed on employers by the Australian Taxation Office when the employer does not meet their superannuation guarantee requirements on time.

The current superannuation guarantee charge regime can be very punitive for employers who inadvertently pay their SG contributions late or short-pay by a small amount, which can have a significant impact on small business.

When the superannuation guarantee regime was introduced in 1992 the very punitive superannuation guarantee charge was considered necessary to ensure employers complied with the new superannuation guarantee regime.

The government is committed to employees receiving their superannuation so that Australians can save for their retirement. However, it is important to right-size the regulatory environment where appropriate.

For example, this schedule will change how nominal interest is calculated under the superannuation guarantee charge. Currently, nominal interest is charged from the beginning of a superannuation guarantee quarter rather than from the due date of superannuation guarantee contributions, so employers have to effectively pay an additional four months of interest if they make a mistake or inadvertently do not pay on time due to cash flow issues. The changes in this schedule will fix this problem by aligning nominal interest over the period that the superannuation guarantee amount is actually outstanding. This is fairer and less complex for business.

The second change this schedule makes to the superannuation guarantee charge is to align the penalties under the superannuation guarantee charge regime with the administrative penalties that exist under the tax administration act 1953. This change will simplify penalties under the superannuation guarantee charge regime by having penalty rules which are consistent with those applied to other tax obligations.

Currently under the superannuation guarantee charge regime, penalties of up to 200 per cent of the superannuation guarantee charge can be levied by the Australian Taxation Office on employers who do not comply with their superannuation guarantee obligations. This penalty is usually remitted to levels that reflect the nature of the breach.

The third change will align the earnings base for calculating the superannuation guarantee charge with the earnings base used to calculate the superannuation guarantee. Currently these earnings bases are different; aligning them will reduce costs and confusion for employers.

While the changes in schedule 1 will simplify the SG charge and make the penalty more commensurate with the breach, they will provide adequate incentives for employers to comply with their SG obligations in the future.

Schedule 2 to this bill will amend superannuation laws to enable the Australian Taxation Office to pay certain superannuation amounts, such as unclaimed super balances, directly to people with a terminal medical condition. It will also remove the requirement for superannuation funds to lodge a lost members statement with the Australian Taxation Office.

The first change ensures that people who are dealing with the tragic circumstances of being diagnosed as terminally ill or injured do not also have to deal with unnecessary complexity to get access to superannuation savings held by the Australian Taxation Office.

Superannuation balances are generally able to be released tax free to people with a terminal medical condition.

Super funds can already pay balances they hold directly to such people when a valid claim is made.

However, the existing law only permits the Australian Taxation Office to pay unclaimed super directly to terminally ill or injured people in limited circumstances. In most cases, when a terminally ill person makes a claim, currently the Australian Taxation Office first has to transfer the money into an existing account in a super fund before they can access it. This creates unnecessary delays and paperwork for people who should be able to access their super.

In fact, if the person does not have a super account, the red tape they face under existing law increases. For example, if a person on finding out that they are terminally ill withdraws their balance and closes their super account, the person will need to create a new account just to receive their unclaimed super held by the Australian Taxation Office.

This government will not subject people to needless bureaucracy, particularly when they are facing such difficult life circumstances and are likely to be at their most vulnerable.

Enacting this bill will allow the Australian Taxation Office to pay super amounts they hold or administer directly to a terminally ill or injured person. This will eliminate a pointless step in the claims process and provide people with faster access to their super when they need it most.

Schedule 2 will also remove an additional reporting requirement for super funds.

Let me explain by giving you some context.

The Commissioner of Taxation maintains a register known as the Lost Members Register, which contains details of members who have been reported by their super providers as lost. This register is maintained for the purpose of reuniting people with their lost super. The register is updated periodically, using information reported to the Australian Taxation Office by super funds.

This information is currently reported to the Australian Taxation Office by super funds twice a year through the lost members statement. This is a requirement under superannuation law.

However, since 2013 similar information has also been reported by funds to the Australian Taxation Office as a result of a separate reporting obligation under tax administration law.

This bill will remove the extra requirement for funds to lodge the lost member statement. This will remove an additional reporting burden for funds and reduce their compliance costs, without reducing access to information as it will continue to be collected under tax administration law. People will continue to be able to use myGov to search the register for their lost super.

Schedule 3 to this bill contains amendments to the Corporations Act 2001 to modify the notification and reporting obligations applying to certain corporations that have property in receivership or property in respect of which a controller is acting.

These amendments remove the unnecessary compliance costs, reputational damage and investor confusion caused by having to include 'in receivership' on all of a company's public documents, rather than only those documents that relate to the affected trust. The amendments will also reduce the administrative burden on corporations' officers by reducing the matters upon which they are required to report to a 'controller'.

Schedule 4 to this bill repeals inoperative acts and provisions of the tax law. This includes the repeal of the Commonwealth borrowing levy, which has been inoperative since 1997, repeal of the tax-exempt infrastructure borrowing concession, which has been inoperative since 2012, and the repeal of various provisions relating to concessions for equity investments by financial institutions in small and medium enterprises, which have been effectively inoperative since 1999.

Full details of these measures are contained in the explanatory memorandum.

I commend this bill to the House, and I move:

That this bill be now read a second time.

Debate adjourned.

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