Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I speak in support of this legislation. I think the Tax Laws Amendment (2010 GST Administration Measures No. 2) Bill 2010 makes an important difference to assist small and large businesses. Schedule 1, in particular, makes a big difference in ensuring more principled and flexible rules are available to GST groups. Companies can combine in joint venture arrangements to ensure that they improve their cash flow and their compliance costs. To do this, they need the approval of the Commissioner of Taxation, which can take a considerable period of time, as anyone in business knows—anyone who has worked in commercial law or corporate law will understand that that is the case. Currently there are restrictions on the dissolution of a group and amendments of a group, and there is uncertainty about liability issues where they are joint and several, so these amendments are an important improvement in business arrangements for corporate Australia. They will reduce compliance costs and increase certainty by improving the methods by which the Commissioner of Taxation can approve these arrangements.

The amendments also make a difference in relation to business arrangements. It is enormously frustrating for businesses, which have to deal constantly with the obstacles, irregularities and inefficiencies in our tax system. The improvements here, which allow self-assessment on eligibility rather than requiring the Commissioner of Taxation’s approval, will make a big difference. I think they are a good and more flexible arrangement for business in this economy. So schedule 1 makes a significant difference to business arrangements for corporate Australia, and I support this schedule in particular.

Schedule 2 deals with the adoption of rules in relation to indirect taxes and excise. Tax rulings are extremely important for business. I can tell you that, when a client comes to speak to an accountant or a lawyer about a tax problem, it is fantastic when that lawyer or accountant can say: ‘There’s a tax ruling on that. I can just point it out.’ It is a formal mechanism that the Australian Taxation Office can use to interpret the law. We know that happens every day for corporate Australia. We also know that the interpretation of those laws by the Commissioner of Taxation is important to clarify certain inconsistencies in business arrangements. The commissioner does not always get it right, and we have seen that in terms of litigation. However, we want to make sure that taxpayers can be certain, confident and reassured that their tax liabilities are consistent with the commissioner’s interpretation of the law.

Currently, there is no framework for GST rulings, and there have been submissions made to the Board of Taxation about that. The amendments before us include indirect tax rulings, excise advice and the general rulings regime. This is a sensible, moderate and reasonable approach and an important reform for corporate Australia, and it will go a significant way towards ensuring that GST, excise and indirect tax rulings make a big difference to the lives of companies and individuals involved in business arrangements.

The third schedule is probably the one that makes the most difference to the average individual taxpayer and small business across the country. We know that you can only claim an input tax credit if there is a tax invoice. We also know that there are particular requirements to ensure that tax invoices comply with a defined set of requirements. Not everyone who sets up a business will have had prior business experience. Not everyone who opens a newsagency, a fish and chip shop or a flower shop or who leaves a building company to work for themselves as a tradesman will have had prior business experience. Hence, they will not get it right every time they deal with tax laws. The invoices they present will not always comply with the particular prescriptive requirements of the tax legislation; therefore, any flexibility in the legislation makes sense with respect to small business particularly.

When suppliers claim an input credit, the schedule allows for a more reasonable approach to be taken where the tax document contains some minor errors. This seems to be prudent and sensible. If there are fundamental mistakes in a person’s documentation—let us say, it does not even look, smell, feel or taste like a tax invoice—then of course it is not a tax invoice. But we want to make sure that, if there are minor errors, people can claim their input tax credit and not worry that there might be problems. Sometimes this can mean thousands of dollars for small and medium sized businesses. This amendment will make a difference. Minor errors can of course frustrate compliance costs for small business, so the changes here will make a difference. They operate from the middle of this year.

We think these are important changes. We think they will improve the flexibility of our economy, assist more businesses, allow recipients to treat documents as tax invoices where there are minor changes. That will make a big difference, particularly for small business in my area. We do not have many large businesses in the Ipswich and West Moreton area; however, our many small business operators are the backbone of the economy. This is also the situation for many small country towns and rural communities as well as metropolitan Ipswich. So we think this legislation will make a difference.

I am happy to support the legislation because it helps corporate Australia—large businesses in Sydney, Melbourne and Brisbane—as well as small businesses in places like Boonah, Laidley, Kalbar, Beaudesert and other places up in the Somerset region which I know need certainty with respect to these matters.

Jamie Briggs (Mayo, Liberal Party) Share this | Link to this | Hansard source

I will rise for a short time to facilitate my colleague, the shadow spokesperson on this issue, who is moving from a speech she is just completing in the House of Representatives to the Main Committee. I will help her in that transit by offering a few thoughts on the Tax Laws Amendment (2010 GST Administration Measures No. 2) Bill 2010.

The member for Blair was very well versed on the subject. I will give him credit for his knowledge of tax rulings and the interpretation of the tax act. It is probably something he has far too much knowledge of. I congratulate him on his contribution on the bill. Like the member for Blair, small business is also hugely important in my electorate. I do not have substantial businesses either, so ensuring that small business is able to operate effectively is very important. My business base is made up of about 7,500 small businesses. We recently surveyed them, in fact, and one of the consistent issues that came through was their difficulty with the complicated tax system and the GST. While the GST was a very worthwhile initiative of the former Howard government—and I now welcome the support of it from those on the other side—it can always be improved to make it easier for small business to make sure that they can get on with the job of their business, whether it be a hairdressing salon, a butcher shop or a winery. They need to keep their businesses open and operating without too much complication in relation to meeting their tax obligations.

It is very important that we look at these pieces of tax legislation to ensure that they are as simple as they can possibly be, but obviously ensuring that the tax act and the tax obligations of people are being fulfilled. No-one likes paying tax. It is the view on our side of the chamber that we should be paying the lowest tax we possibly can. We do not support great, big new taxes—not on small business in this case but also on other industries. We think that will damage the economy and will damage the very industry which is driving so much of our economic activity in our country. We on our side of the House are always conscious of trying to reduce the tax burden on Australian business. It is a real balance to ensure that the tax act is being properly implemented and at the same time allowing people to get on and run their business.

The member for Blair talked in great detail about the changes contained in this bill—in far better detail than I could—and I agree with much of what he had to say. Occasionally the member for Blair and I do not agree on issues relating to tax, and certainly in recent days I think we probably have a vastly different view on some of the changes to our tax system that are being planned. Clearly the opposition is supportive of this bill, but I will not take too much of the shadow minister’s gunpowder in giving our view. With those few remarks I will conclude.

Sussan Ley (Farrer, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I am pleased to speak on the Tax Laws Amendment (2010 GST Administration Measures No. 2) Bill 2010. This bill amends the tax law to further progress a package of reforms announced in the 2009-10 budget aimed at simplifying and streamlining the administration of GST in the areas of grouping, invoicing and rulings. These amendments are from recommendations of the Board of Taxation in its Review of the Legal Framework for the Administration of the Goods and Services Tax. The changes will apply from 1 July 2010.

The bill deals with three schedules. Schedule 1, GST groups and GST joint ventures, amends the A New Tax System (Goods and Services Tax) Act 1999 and the Taxation Administration Act 1953 to adopt more principled and flexible rules for GST groups and GST joint ventures. This schedule will enable entities to self-assess their eligibility to form or change a GST group or joint venture and they will only need to notify the commissioner of their action before the due date of lodgment of the GST return for the tax period. Presently, the commissioner must formally approve such changes. Schedule 1 also greatly increases the flexibility of the grouping rules by allowing entities to form, change and dissolve the GST group or joint venture at any time during a tax period rather than only at the beginning of a tax period or having to unwind transactions back to the start of a tax period. Further, schedule 1 will enable entities to enter into indirect tax-sharing agreements to limit their joint and several liabilities in respect of indirect tax law liabilities to a contribution amount agreed with the representative members for GST groups or joint ventures. This will increase certainty for members in GST groups and joint ventures in relation to their exposure to group debts.

Schedule 2 of the bill concerns rulings. Schedule 2 amends the Taxation Administration Act, the GST act—both mentioned previously—the Excise Act and the Income Tax Assessment Act 1997 to include indirect tax rulings and excise advice in the general rulings regime. This will address problems arising from not having an express legislative framework for GST rulings and from having no formal review rights and no framework setting out the taxpayer’s rights and obligations. Income tax rulings will be expanded to include GST, luxury car tax, wine equalisation tax and excise matters.

Schedule 3, tax invoices, amends the A New Tax System (GST) Act to introduce a more flexible set of requirements for tax invoices. It will allow recipients of supplies to disregard certain errors in a document intended to be a tax invoice, where missing information can be obtained from other documents provided to the recipient by the supplier.

The coalition support this bill, as we support all measures to simplify and streamline the administration of both GST and other taxation provisions. We appreciate the fact that the changes will apply from July 2010. Without further ado, I commend the bill to the House.

Alan Griffin (Bruce, Australian Labor Party, Minister for Veterans' Affairs) Share this | Link to this | Hansard source

in reply—I would like to thank all those members who participated in this debate. The measures contained in the Tax Laws Amendment (2010 GST Administration Measures No. 2) Bill 2010 further progress a package of reforms announced in the 2009-10 budget aimed at simplifying and streamlining the administration of the goods and services tax, this time in the area of grouping, invoices and rulings. These measures arose from recommendations made by the Board of Taxation in its report on GST administration. Adopting the more flexible rules for GST groups and GST joint ventures contained in schedule 1 will reduce compliance costs and increase certainty. In particular, the system of requiring the commissioner’s approval to form, change or dissolve a group will be replaced with self-assessment and notifications. The requirement that the information and changes to a group only take place from the beginning of a tax period will be replaced with rules allowing such actions to take place at any time during a tax period. Finally, entities entering into indirect tax-sharing arrangements will be able to address the uncertainty associated with the existing joint and several liability provisions to limit their liability for unpaid indirect tax amounts.

The amendments in schedule 2 of the bill will expand the income tax rulings regime to include GST, luxury car tax and wine equalisation tax rulings and excise advice. This introduces a range of features, including the right to object to a private, indirect tax or excise ruling. Providing consistent rules across different taxes will simplify the tax law and increase certainty for taxpayers.

The amendments contained in schedule 3 of the bill will introduce more flexible requirements for tax invoices and allow errors in tax invoices to be disregarded by recipients where the relevant information can be obtained from other documents issued by the supplier. As a result of this measure, minor errors in tax invoices will no longer result in taxpayers incurring the compliance costs associated with revising their input tax credits and obtaining a corrected tax invoice. The measures contained in this bill apply on and from 1 July 2010. I commend this bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

Ordered that this bill be reported to the House without amendment.