Michaelia Cash (WA, Liberal Party, Assistant Minister for Immigration and Border Protection) Share this | Hansard source

I would like to thank those senators who have contributed to this debate. This bill is part of the government's plan to modernise our tax and superannuation laws and remove laws that are no longer working or appropriate. Schedule 1 to this bill will help improve the operation of the scrip-for-scrip rollover rules where shares or interests in one entity are exchanged for similar shares or interests by ensuring that the integrity measures are better targeted. A recent decision in the full Federal Court of Australia highlighted that integrity measure in the rollover rules were not operating as intended and could be circumvented. It is important to ensure that a rollover is available only where it is appropriate—for instance, where an entity seeks to structure its affairs in such a way that tax is indefinitely deferred. Schedule 1 to this bill will amend the special integrity rules of the scrip-for-scrip rollover relief. These new rules will also apply to restructures involving trusts and will ensure that integrity rules cannot be avoided.

It is also important to ensure integrity in the personal income tax system. Schedule 2 to this bill will update the tax law to ensure that government employees who earn an income while delivering official development assistance overseas are subject to income tax on those earnings through the Australian personal income tax system. This income tax exemption was introduced to protect against the double taxation of income, but the operation of intergovernmental tax agreements now effectively means that some Australians are able to avoid paying income tax in both Australia and the overseas country. This bill will remove an unintended consequence in the personal income taxation system and make the system fairer by ensuring that some people are not able to obtain an inappropriate tax exemption. Defence and police personnel as well as private sector and charity workers delivering official development assistance overseas will maintain that current eligibility for the income tax exemption.

The final amendment presented in this bill will help to ensure that lost member superannuation accounts with smaller balances are not eroded by fees, charges and insurance premiums. In general, lost super is a super account held by a super fund where the fund has lost contact with the member or the account has been idle for more than five years. Small lost accounts must be transferred to the ATO as unclaimed money. Transferring lost super accounts with low balances to the ATO helps protect such accounts from fee erosion and preserves their value until they can be reunited with the member. Individuals are able to reclaim this super money from the ATO at any time and are paid interest. Presently, lost member super accounts with less than $2,000 must be transferred from funds to the ATO as unclaimed superannuation money. This bill will increase the $2,000 threshold in two phases: first, to $4,000 from 31 December 2015, and then to $6,000 from 31 December 2016. These changes will help ensure that small lost member super account balances remain available to improve retirement incomes. It is only fair that this money is preserved for its original purpose, and that is of course to benefit members in retirement.

This bill makes Australia's tax and superannuation laws more modern and robust by removing or amending provisions that are no longer appropriate or no longer have the intended effect. I commend this bill to the Senate.