Ken Wyatt (Hasluck, Liberal Party, Minister for Indigenous Australians) Share this | Hansard source

Firstly, I'd like to thank those members who have contributed to this debate on the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021. Schedule 1 of the bill amends the Income Tax Assessment Act 1997, the tax law, to require non-government entities seeking endorsement as a deductible gift recipient, DGR, to be a charity registered with the Australian Charities and Not-for-profits Commission, or to be operated by a registered charity. Ancillary funds and specifically listed entities will be exempt from this requirement.

The requirement to be a charity already applies to the majority of general DGR categories, in subdivision 30-B of the 1997 tax law. This measure will amend the special conditions applying to the remaining general DGR categories requiring non-government entities to maintain charity registration in order to retain their eligibility for DGR endorsement. The amendments include a 12-month transition period, which will provide non-charity DGRs with time to meet the requirements for charity registration without losing their DGR status. Eligible DGRs may also have access to an additional three-year transition period. This measure will improve the consistency of regulation, governance and oversight of DGRs, in turn helping to support continued confidence in the sector and public support for DGR entities.

Schedule 2 of this bill contains amendments to the Income Tax Assessment Act 1936 which remove the preferential tax treatment provision for offshore banking units, or OBUs, and provide transition arrangements for existing OBUs. In October 2018, the OECD's Forum on Harmful Tax Practices found that Australia's OBU regime contained harmful features. As a result, the Treasurer announced on 26 October 2018 that the government would seek to address the OECD's concerns. The OBU regime has been closed to new entrants since the Treasurer's announcement. Timely passage of this bill will allow the OECD to confirm that Australia has amended the OBU regime to ensure that it is not a harmful tax practice. This is consistent with the Morrison government's ongoing support for international tax integrity, and will protect Australia from potential reputational damage and other possible consequences. The bill provides for two-year transition arrangements to assist existing OBUs to transition away from the regime.

I commend this bill to the House.

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