Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill amends various taxation laws to implement a range of changes and improvements to Australia’s taxation system. A number of changes in this bill will reduce compliance costs for Australian taxpayers.

Schedule 1 implements two fringe benefits tax recommendations from the Report of the taskforce on reducing the regulatory burdens of business: rethinking regulation. The first recommendation reduces compliance costs for business by increasing the minor benefits exemption threshold from less than $100 to less than $300. The second recommendation also reduces compliance costs by increasing the reportable fringe benefits amount threshold from more than $1,000 to more than $2,000.

This schedule also further reduces compliance costs by increasing the reduction of taxable value that applies to eligible in-house fringe benefits and airline fringe benefits from $500 to $1,000.

In addition, this schedule extends the definition of ‘remote’ for the purposes of the fringe benefits tax concessions, where the shortest practicable route involves travel by water. This is in recognition of the special circumstances of employees who work in locations isolated from populated areas by a body of water.

All of the amendments will apply in respect of the fringe benefits tax year commencing 1 April 2007 and all later years.

Schedule 2 proposes several amendments to the GST concessions following the establishment of the Military Compensation Scheme under the Military Rehabilitation and Compensation Act 2004.

Firstly, this schedule will ensure that supplies of drugs, medicines and other pharmaceutical items are GST free when supplied as pharmaceutical benefits under the Military Compensation Scheme.

Secondly, the GST-free car concession is extended to include people whose service in the Defence Force or in any other armed force of Her Majesty has resulted in them receiving, or being eligible to receive, a special rate disability pension under the Military Compensation Scheme.

These amendments will take effect from 1 July 2004, the date of the commencement of the Military Compensation Scheme.

Schedule 3 removes the part-year tax-free threshold for taxpayers who cease to be engaged in full-time education for the first time. This measure extends the full tax-free threshold of $6,000 to these taxpayers. The amendments were announced in the 2006-07 budget and will simplify the tax law and reduce compliance costs for taxpayers completing full-time study.

Under the current law, taxpayers who cease full-time education for the first time are not eligible for the full tax-free threshold of $6,000. Rather, they are entitled to a reduced tax-free threshold that depends on the number of months they are not studying as well as their income during the full-time education period. These amendments apply from the 2006-07 income year.

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

Debate (on motion by Mr Edwards) adjourned.