Michael Sukkar (Deakin, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

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I move:

That this bill be now read a second time.

This bill contains a number of measures which improve the integrity of the tax system, ensure existing legislation operates as intended and provide flexibility in completing new financial adviser requirements.

Schedule 1 to this bill amends the Income Tax Assessment Act 1936 to improve the integrity of the taxation of testamentary trusts.

Currently, unearned income of minors is generally taxed at higher rates, which discourages adult taxpayers from splitting their income with minors to reduce the overall level of tax that they pay. However, income minors receive from testamentary trusts is taxed at adult marginal tax rates, which access the $18,200 tax-free threshold.

Some taxpayers are therefore able to inappropriately obtain the benefit of this lower tax rate by injecting assets unrelated to the deceased estate into the testamentary trust.

As announced in the 2018-19 budget, the government is making changes to clarify that the concessional tax rates available for minors receiving income from testamentary trusts will be limited to income derived from assets that are transferred from the deceased estate, or the proceeds of the disposal or investment of those assets.

These changes apply from 1 July 2019, and income from assets already in testamentary trusts prior to 1 July 2019 will not be affected by this measure.

Schedule 2 to this bill extends transitional deadlines for new requirements for financial advisers. Existing advisers will be required to complete the exam set by the Financial Adviser Standards and Ethics Authority (FASEA) by 1 January 2022, which is an additional year, and meet FASEA's qualification requirements by 1 January 2026, which is an additional two years.

This extension will ensure financial advisers have sufficient time to meet the new requirements, balancing the professionalisation of the industry with the need to maintain the ongoing flexibility and affordability of advice. In particular, the extension assists rural and regional advisers and working parents, including parents taking parental leave during the transition period, maintaining a diverse adviser industry.

The Legislative and Governance Forum for Corporations was consulted in relation to the amendments to transitional deadlines for financial advisers in schedule 2 as required under the Corporations Agreement 2002.

Schedule 3 to the bill, meanwhile, makes a number of amendments to Treasury portfolio legislation to ensure that Treasury laws operate as intended. The amendments clarify the law, correct technical or drafting errors, remove anomalies and address unintended outcomes.

The minor and technical amendments process was first supported by a recommendation of the 2008 Tax Design Review Panel, which was appointed to examine how to reduce delays in the enactment of tax legislation and improve the quality of tax law changes. It has since been expanded to all Treasury portfolio legislation.

The amendments made by schedule 3 to this bill further the government's commitment to the care and maintenance of Treasury laws. These amendments also reduce regulatory burden and make it easier for Australians to comply with current laws.

The Legislative and Governance Forum for Corporations was again consulted in relation to schedule 3 of this bill, as required under the Corporations Agreement 2002.

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

Debate adjourned.