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 (Transfer of Provisions) Bill 2010. The bill deals with five schedules. Schedule 1 concerns the collection and recovery of tax. Schedule 1 rewrites the remaining sections of part 6 of the Income Tax Assessment Act 1936 into the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953. Part 4 contains rules about the collection and recovery of income tax, including rules about when income tax becomes due and payable, rules allowing the commissioner to make estimates of certain tax debts and to take recovery action based on those estimates, and rules imposing penalties on directors of companies that fail to pay certain tax debts. The rewritten rules of collection and recovery include those giving the commissioner power to seek security from a taxpayer for an existing or future tax liability in certain situations such as a serious risk of tax liability not being paid, expanded security deposit rules to cover all taxes administered by the commissioner and new machinery rules and higher penalties for noncompliance.

Schedule 2 relates to commercial debt forgiveness. Schedule 2 rewrites the remaining schedule 2C to the Income Tax Assessment Act 1936 into the Income Tax Assessment Act 1997 and contains the rules for the income tax treatment of the gains made when a taxpayer’s debt is forgiven. Schedule 3 rewrites the remaining schedule 2E to the Income Tax Assessment Act 1936 into the Income Tax Assessment Act 1997. Schedule 2E ensures that a lessor and a lessee of a luxury car get the same income tax treatment they would have got had the lessor sold the car to the lessee and lent the lessee the money for the purchase.

Schedule 4 is on farm management deposits. Schedule 4 rewrites the remaining schedule 2G to the Income Tax Assessment Act 1936 into the Income Tax Assessment Act 1997. Schedule 2G establishes the farm management deposits scheme, which allows eligible primary producers to set aside pre-tax income in profitable years for subsequent withdrawal in low-income years. Schedule 5, on general insurance, rewrites the remaining schedule 2J to the Income Tax Assessment Act 1936 into the Income Tax Assessment Act 1997. Schedule 2J ensures that general insurance companies are taxed on premium income received and can deduct liabilities for outstanding claims over the period of risk under the policies to which the income and deductions relate.

The subject matter of all those schedules is quite interesting and complicated, but that is not what this bill is about. This is about a rewrite. This is about an ongoing tax law simplification project which rewrites the archaic and sometimes very difficult to interpret rules in the 1936 act into the 1997 plain English act. It is taking an awfully long time. We would like to see it speeded up and we would like to see provisions that are not as simple and straightforward in their rewriting as these ones accelerated in the queue. However, in the rewrite, quite appropriately, there are no changes to the law. The coalition approves this bill. It is uncontroversial and I commend it to the House.

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

I speak in support of the Tax Laws Amendment (Transfer of Provisions) Bill 2010. There are some in the House and the Senate who go to the gym when they are here in Parliament House. I have actually never weighed the income tax assessment legislation, but I think if you weighed it it would probably weigh the same as a couple of dumbbells that you could throw around and push up. It is pretty heavy stuff. I remember when I studied it at law school and when I had it on the shelf in private practice. You have to watch the way you pull it out because it is quite heavy. It is also quite complex, and anyone who studies it and deals with it day by day knows how difficult it is.

The member for Farrer was correct: it was 1936 when the original legislation went through. That was a long time ago. We have talked about this being known as the Tax Law Improvement Project. It has been going on for a long time. It got a kick along under Paul Keating, when he was the Prime Minister, back in the early nineties. There was a recommendation given to the Keating Labor government by the Joint Committee of Public Accounts and Audit to make some changes. But, seriously, we have to do something about this to speed the process up. I commend the legislation that is before this House. We are making changes. We are rewriting 149 pages of the old 1936 act and putting it into the 1997 Income Tax Assessment Act and the Taxation Administration Act. That is significant change. As the Hon. Nick Sherry said in a press release on 17 March this year, that is a reduction of 30 per cent because it will be reduced to 101 pages. But we have to do better long term, whether we occupy the treasury bench or those opposite do.

I will not go through the schedules that the member for Farrer outlined, but I will say that we are not changing in any substantive way the legislation that is before the House. We are modernising the law, providing certainty and consistency through the changes, and using language which we use today. The use of modern English in legislation cannot come quickly enough. Some of the provisions of the Income Tax Assessment Act are almost incomprehensible. They really are. They are very difficult to understand. For those people in small and medium sized businesses who are more interested in selling their goods and services and dealing with their clients and customers, to have to wade through complicated, archaic provisions that use language which they would not use in modern-day life—and which their children certainly would not use—is simply ridiculous. We must accelerate the process of modernisation of our laws when it comes to using plain English. Sometimes you wonder how we draft legislation. We have paragraphs and subparagraphs that go on forever. We have to make changes.

I commend the government for what they are doing. This is a significant reform and it makes a big difference to how the legislation looks. These are complicated areas, and I know it takes time, but we have to accelerate the process. The project needs to be given some impetus. I agree with the Hon. Nick Sherry that this is an improvement. I think it does reduce complexity. We are about committing ourselves to slashing red tape and modernising not just the tax law system but other complicated pieces of legislation. Governments of both persuasions do this from time to time. We do this through the Statute Law Revision Act, and we do it on numerous occasions. Since I was elected to this place in 2007, I have spoken on that piece of legislation and various other pieces of legislation like it on numerous occasions, because there are some quite strange provisions in legislation. I commend the government for tackling the project, for giving it some life, for accelerating it, but we must do better. This legislation does make some changes. It rewrites the 1936 act. I will now make mention of some of the schedules.

I would like to mention schedule 2G, which establishes the farm management deposits scheme. This allows eligible primary producers to set aside pre-tax income in profitable years for subsequent withdrawal in low-income years. We are not making any change; we are just modernising the legislation. But that is a good scheme, particularly for the farming communities in the Somerset region, the Lockyer Valley and the Fassifern Valley in South-East Queensland, which I represent. In difficult drought conditions it is tough not just on the farmers but also on the small business operators in those communities, so I am pleased that we have seen the drought break in South-East Queensland and that we have seen improvements. I really support this scheme. I think it will make a big difference in farming communities. In particular, I am pleased that we are modernising the legislation with respect to that scheme, and I commend the legislation to the House.

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

in reply—Firstly, let me thank those members who have contributed to this debate. The Tax Laws Amendment (Transfer of Provisions) Bill 2010 repeals five areas of income tax law, adding up to 149 pages of the Income Tax Assessment Act 1936, and rewrites them into the Income Tax Assessment Act 1997 and, in one case, into the Taxation Administration Act 1953. The bill does not make any major policy changes to the provisions it rewrites. Indeed, the changes it makes are mostly to the location of the provisions, to their structure and to their text. But, still, those changes are important.

The government is committed to having a single income tax assessment act for Australia within a reasonable time. The benefits of achieving that might not be noticed by many, but they will be appreciated by those taxpayers and tax practitioners who have to work with the income tax law, a most difficult piece of legislation. Achieving a single assessment act will reduce the complexity of that legislation, and this bill takes an important step towards achieving that goal, so it is pleasing to see that other members have taken an interest in this matter, which has not always had the profile that it deserves. 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.