Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill. I seek leave to move government amendments (1) to (37) on sheet JP186 together.

Leave granted.

I move the amendments:

(1) Clause 2, page 2 (after table item 9), insert:

(2) Clause 2, page 3 (table item 17), omit the table item.

(3) Schedule 1, page 8 (after line 4), after item 5, insert:

5A Subsection 3 ( 1 )

  Insert:

  large ADI has the same meaning as in the Income Tax Assessment Act 1997.

Note: For a consolidated group, the head company is the large ADI.

(4) Schedule 1, page 8 (after line 6), after item 6, insert:

6A Subsection 23(1A)

  Omit "section 23A", substitute "sections 23A and 24".

(5) Schedule 1, item 7, page 8 (line 10), omit "section 23A", substitute "sections 23A and 24".

(6) Schedule 1, item 8, page 8 (lines 12 to 14), omit the item, substitute:

8 Paragraph 23 ( 3 ) (b)

  Repeal the paragraph, substitute:

  (b) in respect of the standard component:

     (i) unless subparagraph (ii) applies—27.5%; or

     (ii) if the company is a large ADI for the year of income—30%.

(7) Schedule 1, item 13, page 9 (lines 5 and 6), omit the item, substitute:

13 Paragraph 23A(a)

  Repeal the paragraph, substitute:

  (a) in respect of the ordinary class:

     (i) unless subparagraph (ii) applies—27.5%; or

     (ii) if the company is a large ADI for the year of income—30%; and

(8) Schedule 1, page 9 (after line 6), after item 13, insert:

13A After section 23A

  Insert:

24 Rate of tax payable by large ADIs

     The rate of tax in respect of the taxable income of a company (other than a life insurance company or an RSA provider) that is a large ADI for the year of income is 30%.

(9) Schedule 1, item 15, page 9 (lines 14 to 18), omit the item, substitute:

15 Paragraph 28(a)

  Repeal the paragraph, substitute:

  (a) if paragraph 98(3)(b) of the Assessment Act (about beneficiaries that are companies) applies:

     (i) unless subparagraph (ii) applies—the rate specified in subsection 23(2); or

     (ii) if the beneficiary is a large ADI for the year of income—the rate specified in section 24; and

(10) Schedule 1, item 19, page 10 (line 7), omit "Paragraph 23(3)(b)", substitute "Subparagraph 23(3)(b)(i)".

(11) Schedule 1, item 23, page 10 (line 15), omit "Paragraph 23A(a)", substitute "Subparagraph 23A(a)(i)".

(12) Schedule 1, item 27, page 11 (line 7), omit "Paragraph 23(3)(b)", substitute "Subparagraph 23(3)(b)(i)".

(13) Schedule 1, item 31, page 11 (line 15), omit "Paragraph 23A(a)", substitute "Subparagraph 23A(a)(i)".

(14) Schedule 1, item 35, page 12 (line 7), omit "Paragraph 23(3)(b)", substitute "Subparagraph 23(3)(b)(i)".

(15) Schedule 1, item 39, page 12 (line 15), omit "Paragraph 23A(a)", substitute "Subparagraph 23A(a)(i)".

(16) Schedule 1, page 12 (after line 18), after Part 8, insert:

Part 8A—Amendment of the Income Tax Assessment Act 1997

Income Tax Assessment Act 1997

40A Section 960 -265 (at the end of the table)

Add:

40B Subsection 960 -270 ( 3 )

  After "item 14", insert "or 15".

40C Subsection 960 -275 ( 6 )

  After "item 14", insert "or 15".

40D Subsection 960 -280 ( 6 )

  After "item 14", insert "or 15".

40E Section 960 -290 (heading)

  Omit "levy threshold for the major bank levy", substitute "thresholds for major bank levy and large ADIs".

40F Subsection 960 -290 ( 1 )

  Omit "the amount mentioned in the provision listed at item 14", substitute "an amount mentioned in a provision listed at item 14 or 15".

40G Subsection 995 -1 ( 1 )

  Insert:

  applicable reporting standard has the same meaning as in the Major Bank Levy Act 2017.

40H Subsection 995 -1 ( 1 ) (paragraph (aa) of the definition of indexation factor )

  Omit "for the amount mentioned in the provision listed at item 14", substitute "for an amount mentioned in a provision listed at item 14 or 15".

40J Subsection 995 -1 ( 1 ) (paragraph (b) of the definition of index number )

  Omit "the amount mentioned in the provision listed at item 14", substitute "the amounts mentioned in the provisions listed at items 14 and 15".

40K Subsection 995 -1 ( 1 )

  Insert:

  large ADI: an Australian resident company is a large ADI for an income year if:

  (a) disregarding subsection 701-1(1) (the single entity rule) both of the following apply:

     (i) the company is an *ADI;

     (ii) the amount equal to the total liabilities of the ADI for any *quarter in the income year, as reported under an *applicable reporting standard, exceeds the *large ADI threshold for the quarter; or

(b) the company is the *head company of a *consolidated group and paragraph (a) applies to one or more *subsidiary members of the group for the income year.

Note: The effect of this definition for a consolidated group is that, if paragraph (a) applies to any member, the head company is a large ADI. The head company's status as a large ADI affects the rate of tax payable on the head company's taxable income (worked out on the basis that subsidiary members are part of the head company): see subsection 701-1(1) (the single entity rule) and the Income Tax Rates Act 1986.

  large ADI threshold: the large ADI threshold for the *quarter starting on 1 July 2017 is $500 billion. The amount is indexed quarterly.

Note: Subdivision 960-M shows how to index amounts.

(17) Schedule 1, page 13 (after line 25), after subitem 41(8), insert:

  (9) The amendments made by Part 8A of this Schedule apply to the 2023-24 year of income and later years of income.

  (10) The amendments made by Parts 5 and 8A of this Schedule also apply for the purposes of determining the corporate tax rate for imputation purposes for the 2023-24 income year.

Note: This ensures the amendments made by Parts 5 and 8A can be applied to the 2022-23 income year for the purposes of working out the corporate tax rate for imputation purposes for the 2023-24 income year.

(18) Schedule 2, Part 1, page 14 (line 3) to page 17 (line 20), omit the Part, substitute:

Part 1—Amendments commencing 1 July 2023

Income Tax Assessment Act 1997

1 Subsection 995 -1 ( 1 ) (definition of corporate tax rate )

  Repeal the definition, substitute:

  corporate tax rate:

  (a) in relation to a company that is a *large ADI—means the rate of tax in respect of the taxable income of a company covered by section 24 of that Act; or

  (b) in relation to another entity—means the rate of tax in respect of the taxable income of a company covered by subsection 23(2) of that Act.

2 Subsection 995 -1 ( 1 ) (definition of corporate tax rate for imputation purposes )

  Repeal the definition, substitute:

  corporate tax rate for imputation purposes, of an entity for an income year, means:

  (a) unless paragraph (b) applies—the rate of tax for the income year in respect of the taxable income of a company covered by subsection 23(2) of the Income Tax Rates Act 1986; or

  (b) if the entity was a *large ADI for the previous income year—the rate of tax for the income year in respect of the taxable income of a company covered by section 24 of that Act.

(19) Schedule 3, item 1, page 19 (lines 5 to 15), omit the item, substitute:

1 Subsection 160AAB ( 1 ) (definition of statutory percentage )

  Repeal the definition, substitute:

  statutory percentage means:

  (a) if the year of income is the 2002-03 year of income or a later year of income before the 2024-25 year of income—30%; or

  (b) if the year of income is the 2024-25 year of income or a later year of income and the policy concerned was issued by a company that is a large ADI (within the meaning of the Income Tax Assessment Act 1997) for the year of income—30%; or

(c) otherwise:

     (i) if the year of income is the 2024-25 year of income—27.5%; or

     (ii) if the year of income is the 2025-26 year of income—27%; or

     (iii) if the year of income is the 2026-27 year of income—26%; or

     (iv) if the year of income is the 2027-28 year of income or a later year of income—25%.

1A Subsection 177A ( 1 ) (definition of standard corporate tax rate )

  Repeal the definition, substitute:

  standard corporate tax rate means:

  (a) unless paragraph (b) applies—the rate of tax in respect of the taxable income of a company covered by subsection 23(2) of the Income Tax Rates Act 1986; or

  (b) if the relevant taxpayer is a large ADI (within the meaning of the Income Tax Assessment Act 1997) for a year of income in which the DPT tax benefit is obtained, or would be obtained—the rate of tax in respect of the taxable income of a company covered by section 24 of the Income Tax Rates Act 1986.

(20) Schedule 3, item 2, page 19 (line 19), after "Company A", insert "(which is not a large ADI)".

(21) Schedule 3, item 3, page 20 (line 12), after "Company E", insert "(which is not a large ADI)".

(22) Schedule 3, items 6 and 7, page 20 (line 28) to page 21 (line 8), omit the items, substitute:

6 Subsection 65 -30 ( 2 )

  Repeal the subsection, substitute:

  (2) However, reduce the *tax offset by the amount worked out by multiplying your *net exempt income by:

  (a) unless paragraph (b) applies—0.275; or

  (b) if you are a *large ADI for the income year—0.3;

if you have a taxable income for the income year.

7 Subsection 65 -35(3A)

  Repeal the subsection, substitute:

  (3A) In reducing *net exempt income for an income year under subsection (3):

  (a) unless paragraph (b) applies—each 27.5 cents of *tax offset reduces the net exempt income by $1; or

  (b) if you were a *large ADI for the year—each 30 cents of tax offset reduces the net exempt income by $1.

(23) Schedule 3, Part 1, page 21 (after line 21), at the end of the Part, add:

8A Subsection 713 -545 ( 6 ) (definition of ordinary class tax rate )

  Omit "a life insurance company", substitute "the life insurance company".

(24) Schedule 3, item 9, page 22 (line 5), after "Company A", insert "(which is not a large ADI)".

(25) Schedule 3, item 10, page 22 (line 30), after "Company E", insert "(which is not a large ADI)".

(26) Schedule 3, item 13, page 23 (line 13), omit "Subsection65-30(2)", substitute "Paragraph 65-30(2)(a)".

(27) Schedule 3, item 14, page 23 (line 15), omit "Subsection65-35(3A)", substitute "Paragraph 65-35(3A)(a)".

(28) Schedule 3, item 16, page 24 (line 5), after "Company A", insert "(which is not a large ADI)".

(29) Schedule 3, item 17, page 24 (line 30), after "Company E", insert "(which is not a large ADI)".

(30) Schedule 3, item 20, page 25 (line 13), omit "Subsection65-30(2)", substitute "Paragraph 65-30(2)(a)".

(31) Schedule 3, item 21, page 25 (line 15), omit "Subsection65-35(3A)", substitute "Paragraph 65-35(3A)(a)".

(32) Schedule 3, item 23, page 26 (line 5), after "Company A", insert "(which is not a large ADI)".

(33) Schedule 3, item 24, page 26 (line 30), after "Company E", insert "(which is not a large ADI)".

(34) Schedule 3, item 27, page 27 (line 13), omit "Subsection65-30(2)", substitute "Paragraph 65-30(2)(a)".

(35) Schedule 3, item 28, page 27 (line 15), omit "Subsection65-35(3A)", substitute "Paragraph 65-35(3A)(a)".

(36) Schedule 4, page 28 (lines 3 and 4), omit the heading.

We also oppose schedule 4 in the following terms:

(37) Schedule 4, items 1 and 2, page 28 (lines 5 to 14), to be opposed.

In the interests of a compromise, the government is willing to move these amendments to exclude the large authorised deposit-taking institutions, the big four banks, from accessing the reduced company tax rate. The government has faithfully sought to implement our enterprise tax plan policy. We secured passage of the first stage of company tax cuts in March 2017. In May 2017, we then introduced this further bill to implement the remainder of the enterprise tax plan. We have continued to negotiate, respectfully, with the crossbench over many months.

The opposition, of course, have been running around the country claiming that the reason that they do not support this bill is that it provides a tax cut to the big banks. Well, the Labor Party now has the opportunity to support our amendments, to vote in favour of our amendments and to support opportunity for working families around Australia to get ahead. If you're genuinely concerned about a tax giveaway to the big banks, you now have the opportunity to vote in favour of these amendments to exclude the four big banks, to carve them out, and still protect jobs for working Australians around Australia by helping to ensure that our businesses around Australia can be internationally competitive. If you vote against these amendments, you will be exposed for the absolute hypocrisy of the political attack that you've been running for the last two years. If you genuinely care about working Australians, if you genuinely care about working families, you will help ensure that businesses around Australia who compete with businesses in other parts of the world have the opportunity to be viable, to be competitive and to be successful into the future. If it's all about the big banks, no doubt you will vote in favour of these amendments, and you will then vote in favour of the legislation as a whole.

So here is the proposition. These amendments will reduce the cost of corporate tax cuts for the period to 2027-28 by $7.9 billion. So this corporate tax reform package now costs $7.9 billion less. We've already indicated that we are prepared to pursue reforms to our petroleum resource rent tax arrangements, which would not have an impact over the forward estimates but which should have a positive revenue impact over the medium term and beyond.

Here we are. As a result of the vote by the Senate on the second reading, the Senate now has the opportunity to act in the best interest of working families around Australia for today and into the future. I urge the Senate to take that opportunity. I urge the Senate to support our amendments. If Labor votes against this amendment and this bill then it will be proof that Bill Shorten doesn't care about jobs, he doesn't care about investment into Australia, he doesn't care about economic growth and he's essentially just interested in the politics; he's just interested in doing everything he can to prevent the elected government of Australia from implementing our plan for more jobs and stronger growth.