Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Today, we're taking steps to ensure that our tax system is simpler and fairer.

Schedule 1 to this bill, which has four schedules, improves the integrity of the foreign resident capital gains withholding tax regime.

Foreign residents, like Australian residents, are required to pay capital gains taxes on the sale of their Australian real property assets. However, there's an incentive for foreign residents to not lodge a tax return to avoid this liability. The current withholding regime has been in place since 2016 as an integrity measure against this—ensuring a 12.5 per cent down payment on any CGT liability at the point of sale, for asset sales above $750,000.

However, where CGT liabilities are greater than 12.5 per cent, there remains an incentive for foreign residents to avoid lodging a tax return in order to sidestep their tax obligations.

The amendments implement the government's 2023-24 MYEFO measure to increase the withholding tax from 12.5 per cent to 15 per cent and removes the $750,000 threshold.

These changes help to level the playing field between Australian and foreign investors, by ensuring foreign investors selling a real property asset (such as a residential property) are subject to the same overall tax obligations as Australians, and better aligns a foreign resident's CGT liabilities with their likely real capital gain.

We're also making our tax system simpler for Australia's small businesses, because we know that small businesses are at the heart of our economy. They're run by hardworking Australians who are used to overcoming challenges to keep their businesses growing. We'd like their tax returns to be one less challenge. The changes in this bill will make it easier to manage their tax affairs so that they can get back to the business of running their businesses and looking after their families.

Currently, businesses need to make a declaration each time their tax agent lodges their single touch payroll data on their behalf. We're changing that. Through schedule 2 of this bill we will allow a business to make a standing declaration to their agent that covers multiple lodgements, for up to 12 months, on the employer's behalf. This simple change simplifies the process, saving time and cutting unnecessary red tape.

The next schedule to the bill extends the time that small and medium businesses have to self-amend their tax assessments from two to four years. Currently, if a business realises they've made a mistake in their tax return after that two-year window, they are forced into a formal objections process that can be time-consuming, complex and, often, costly for them. By extending the self-amendment window, we're giving businesses the flexibility to fix their errors, helping them stay compliant with their tax obligations.

Finally, schedule 4 to the bill delivers on the government's election commitment to cut paperwork and reduce the time small businesses spend doing their taxes. The law currently requires the tax office to process certain refunds as soon as practicable, even when valid bank account details aren't available. This often results in the tax office sending refunds via cheques. These can be delayed or lost, sometimes never cashed, and what we want to do is change this. These changes will allow the tax office up to 90 days to gain valid bank account details before processing certain tax refunds. The greater use of electronic funds transfers to bank accounts will facilitate faster, safer and cheaper payment of refunds.

The changes in this bill are sensible changes to improve the integrity of our tax system, cut red tape and make our tax system more accessible for Australian businesses.

Full details of all the measure are included in the explanatory memorandum.

Debate adjourned.