Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

On behalf of the opposition, it is my pleasure to rise and speak on the Indirect Tax Laws Amendment (Assessment) Bill 2012, which was introduced into the House just a couple of weeks ago on Wednesday 29 February by the then Parliamentary Secretary to the Treasurer and now Assistant Treasurer, the member for Lindsay. I say at the outset that the coalition will be supporting this bill. This is a piece of legislation that updates and improves the substantive indirect tax legislation in a number of respects. As the then parliamentary secretary outlined in his second reading speech, this flows from a Board of Taxation review of the legal framework for the administration of the goods and services tax in particular. That review was announced in June 2008 and reported just over a year later. It made 46 recommendations aimed at changing aspects of the tax in a number of respects.

There are four schedules. The first aims to harmonise self-assessment regimes across the GST, the luxury car tax, the wine equalisation tax and fuel tax credits. In summary, it creates a self-assessment system based on that in place for income tax assessments. As we know, that has been outlined in some detail by the former parliamentary secretary and in the explanatory memorandum. I will not go through all the detail of it and detain the chamber on that issue tonight. Schedule 2 simply allows taxpayers on a GST or a fuel return to take into account minor errors made in previous returns. Essentially, this places in legislation and codifies what is the common-sense and everyday practice of the commissioner, who has had power in this respect. It is a sensible reform. Schedule 3 codifies the current accepted practice that luxury car tax and wine equalisation tax are part of the net amount of GST under the Goods and Services Tax Act. Schedule 4, as is so often the case with bills similar to tax law amendment bills, makes a number of minor changes to the tax law and some corrections of anomalies and removal of redundant provisions.

This bill is part of the general evolution towards a self-assessment system and it makes common-sense changes. The coalition supports this bill. And can I say in conclusion that, as so often the case, I and the member for Blair have the happy duty of speaking on matters with which we agree. I notice that like an old television series he is here again, on a matter of technical tax administration. On behalf of the opposition, I commend to bill to the House.

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

The member for Casey and I seem to be a double act. It is like Abbott and Costello, if I can use that appropriately—but I think that little reference is dear to his heart! As the member for Casey has outlined, the Indirect Tax Laws Amendment (Assessment) Bill 2012 is common-sense tax reform and I support the bill. There is no doubt about it, this government has a record of tax reform. The number of TLAB bills that we have had in the four years I have been in this place is extraordinary.

Since our 2008 budget was delivered by the Treasurer, the Hon. Wayne Swan, we have delivered three rounds of personal income tax cuts totalling $47 billion. We have seen our secure and sustainable pension reforms, and the Hon. Jenny Macklin, the Minister for Families, Community Services and Indigenous Affairs, played an important role in the historic rise in pensions. We saw in the 2010 budget what we called the Stronger, Fairer, Simpler package of reforms in relation to tax law reforms, particularly in non-renewable resources and support for growth across the economy. In the last 12 months we have announced and delivered many of them. Further measures which had been identified by tax reviews have been included in the budget, including what we have seen as a necessary boost to workforce participation. We are taking a million people out of the tax system with our Clean Energy Future package. I think that is a particularly important reform, increasing the tax threshold from $6,000 to over $18,000.

This bill is in the same context and on the same pathway of reform measures that this government is undertaking. I have to say that on some of these reforms, particularly those I would call the more esoteric or obtuse, if not indeed boring, tax law reforms there is agreement by both sides of politics on common sense. Our indirect taxes, including the GST, will be self-assessed like income tax under this legislation, which aims to simplify the law. The member for Casey is right, there is some codification here and it gives a legislative basis in schedules 2 and 3. Also, in schedule 1 there is harmonisation of the income tax system of self-assessment.

Many people do not realise that we self-assess. In large part they think that a man or woman from the Australian Taxation Office comes down and does it. In fact, most people self-assess and most people get it right—they are actually quite honest about how they assess their own tax. There are 2.7 million small businesses in Australia and a population of just under 23 million, and self-assessment obviously works. I do not see people on the rampage, saying, 'Let's get rid of self-assessment.' So what we are seeing here is that the self-actuating system for GST, luxury car tax, wine equalisation tax and fuel tax credits harmonises with our self-assessment of income tax. As the member for Casey correctly stated, it is recommended by the Board of Taxation Review, and that is the harmonisation specified in schedule 1. There has been a history of this and I think that this will improve the tax system as contemplated over a number of years. Going back decades, this type of thing was envisaged, so this is a particularly important measure.

The second schedule is important as well because it is legislating the commission's power to make determinations, allowing a taxpayer to take into account his or her tax or a fuel tax return for the current year. In the past we saw them having to make amendments to correct errors in earlier years on a current return. So it really is a practical way. That is what has been happening in the past and this schedule is designed to make sure the commissioner has a legislative basis for allowing this to take place. It is not wrong that in fact people make errors in their previous returns or in their current returns, and so this is an important change to ease the simplicity and the regulative burden on people as well.

The third schedule changes the GST law to confirm that the luxury car tax and the wine equalisation tax are part of what is called the net amount, because in the past there was some uncertainty. The LCT and WET acts both provided that the amounts paid were added to or subtracted from the net amount. The definition does not specifically mention this in the current legislation, so there are some changes to be made there. It is a matter of legislative certainty.

These are important reforms. These things make a difference in the lives of businesspeople. Anyone who has been in business knows how important it is to ease the regulatory burden and make life simpler when they do their taxes. Anyone who runs a business—and I was running businesses for two decades before I was elected to this place—knows how important it is to get the tax law right. I know how much time I spent dealing with accountants and how important it is to make sure that the tax law is simpler, fairer and stronger for our whole economy and community. That is the how we pay our bills and provide the roads, schools and hospitals. That is how we make sure that we can take one million people out of the tax system. That is the way we can make sure we have a decent society that provides services to people. I commend the minister and congratulate him on becoming a minister. He is a good friend of mine and a former parliamentary secretary. We were elected at the same time and I think he is worthy of the honour. Well done.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

I call the Assistant Treasurer to sum up, and I add my congratulations on his new role.

David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Link to this | Hansard source

Thank you very much, Madam Deputy Speaker. I take the opportunity to thank those members who have contributed to this debate: the member for Casey and the member for Blair. The member for Blair, of course, is one of the great contributors to these amendments to the tax law and a very avid contributor to matters relating to taxation.

The Indirect Tax Laws Amendment (Assessment) Bill 2012 establishes a system of self-assessment for the administration of the indirect tax laws as well as making other changes to the indirect tax laws. The amendments in this bill draw together a number of improvements to the tax laws that have been contemplated by governments for almost 20 years. These include furthering the tax laws improvement project of 1995 and introducing greater standardisation across the administration regimes for different taxes through the adoption of the tax code conventions.

Schedule 1 will simplify the tax system by allowing taxpayers to self-assess their indirect tax liabilities and entitlements for the GST, luxury car tax, wine equalisation tax and fuel tax credits. It will implement recommendations arising from the Board of Taxation's 2008 review of the legal framework for the administration of the goods and services tax. The schedule harmonises the self-actuating system of GST, luxury car tax, wine equalisation tax and fuel tax credits with the self-assessment system of income tax by adopting well-established principals from the income tax self-assessment system where appropriate, with some modifications to allow for the special features of indirect taxes. The provisions use tax code conventions and are drafted generically so they can be applied across all taxes. Under the current self-actuating system, taxpayers are automatically liable for indirect tax liabilities or entitlements based on the liabilities and entitlements attributable to a tax period. Under the new assessment regime, taxpayers will only be liable to pay or be entitled to a refund of the amount stated in their assessment. Taxpayers can continue to report their indirect tax liabilities and entitlements in the same manner as they currently do. In most cases lodgement of a Business Activity Statement will trigger a self assessment. The commissioner will be taken to have made an assessment and the Business Activity Statement will be treated as a notice of assessment. Taxpayers who are required who are required to lodge a Business Activity Statement will continue to do so on the same due dates and will be required to pay their liabilities on the same day.

Consistent with the income tax assessment regime the commissioner may amend an assessment within a four-year period of review. Likewise taxpayers may apply for an amendment within that same four-year period. An assessment may only be amended outside the period of review in certain circumstance. An amendment in the period of review will give rise to a refreshed period of review of four years in relation to the particular that was amended.

To minimise the administrative and compliance costs for both taxpayers and the commissioner, some features of the existing regime have been preserved and where necessary existing administrative practices have been legislated. These changes to the administrative framework for indirect taxes will formalise the administration process for the indirect tax laws and help reduce the complexities associated with having different administrative regimes for indirect and income taxes. Greater standardisation between the administration regimes of the two taxes will result in lower compliance costs for taxpayers. It will also decrease the need for advisers and administrators to have specialist knowledge of the multiple tax administration provisions. The majority of the amendments in schedule commence on 1 July 2012. The amendments, which remove provisions no longer applicable following the introduction of the new assessment regime, commence on 1 January 2017.

Schedule 2 legislates the commissioner's power to make a determination to allow a taxpayer to take into account on his or her return for the current tax period minor errors made on certain returns for preceding tax periods. The amendments contained in this schedule ensure that the commissioner may, in a self-assessment system, continue to allow taxpayers to correct mistakes in a current tax period rather than needing to amend an earlier assessment.

Schedule 3 confirms that that luxury car tax and wine equalisation tax are part of the calculation of the net amount under the GST act. The luxury car tax and wine equalisation tax acts already provide that payments and refunds of amounts under these acts are to be added to or subtracted from the net amount calculated under the GST act. However these amounts are not specifically identified in the definition of net amount in the GST act. There will be no practical changes. Both taxpayers and the commissioner have treated these amounts as part of the net amount in accordance with the luxury car tax and wine equalisation tax acts.

Schedule 4 corrects technical or drafting defects, removes anomalies and addresses unintended outcomes to ensure that the taxation law operates as intended. This is part of the governments ongoing commitment to the care and maintenance of the tax system and I commend the 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.