Jane Hume (Victoria, Liberal Party, Minister for Superannuation, Financial Services and the Digital Economy) Share this | Hansard source

I would first like to thank those senators who have contributed to this debate today and yesterday as well.

Schedule 1 to the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021 amends the Income Tax Assessment Act 1997, referred to as the 1997 tax law, to require a non-government entity seeking endorsement as a DGR to be a charity that's registered with the Australian Charities and Not-for-profits Commission, or to be operated by a registered charity. Ancillary funds and specifically listed entities will be exempt from this requirement. The requirement to be a charity already applies to the majority of the general DGR categories in subdivision 30-B of the 1997 tax law. This measure will amend the special conditions applying to the remaining general DGR categories requiring non-government entities to maintain charity registration in order to retain their eligibility for DGR endorsement. These amendments include a 12-month transition period, which will provide non-charity DGRs with the time to meet the requirements for charity registration without losing their DGR status. Eligible DGRs may also have access to an additional three-year transition period. This measure will improve the consistency of regulation, governance and oversight of deductible gift recipients, in turn helping to support the continued confidence in the sector and, of course, public support for DGR entities.

Schedule 2 of this bill contains amendments to the Income Tax Assessment Act 1936 that remove the preferential tax treatment provided for offshore banking units, commonly known as OBUs, and provide transitional arrangements for existing OBUs. In October 2018, the OECD's Forum on Harmful Tax Practices found that Australia's OBU regime contained some harmful features. As a result, the Treasurer announced, on 26 October 2018, that the government would seek to address those concerns of the OECD, and the OBU regime has been closed to new entrants since the Treasurer's announcement. Passing this bill will allow the OECD to confirm that Australia has amended the OBU regime to ensure that it is not what is known as a 'harmful tax practice'. This is consistent with the Morrison government's ongoing support for international tax integrity, and it will protect Australia from potential reputational damage and other possible consequences. Most importantly, this bill provides for two years of transitional arrangements to assist existing OBUs to transition away from the regime.

I note that there is a second reading amendment that has been tabled by the opposition. I should make it very clear that the government, of course, will be opposing the opposition's second reading amendment. That amendment has two components. One is essentially irrelevant: it refers to issues in the charity sector that are well outside the scope of this particular bill and is simply a pious amendment. The other element of that second reading amendment is simply about multinational tax measures, which I think my colleague and the whip described particularly well. The amendment suggests that the government has failed to curtail the use of tax havens and tax avoidance schemes by multinationals, but nothing could be further from the truth. In fact, we are a global leader in the international fight against corporate and multinational tax avoidance, and, since July 2016, the ATO has in fact raised around $21.5 billion in tax liabilities against large public groups and multinational corporations.