Simon Birmingham (SA, Liberal Party, Minister for Trade) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

TREASURY LAWS AMENDMENT (REDUCING PRESSURE ON HOUSING AFFORDABILITY MEASURES) BILL 2019

This Bill implements measures announced in the Government's 2017-18 Budget housing affordability package to improve housing affordability, encourage investment in affordable rental housing and improve the integrity of the tax system. These measures support those already legislated as part of the Treasury Laws Amendment (Housing Tax Integrity) Act 2017 and the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Act 2017.

Schedule 1 to this Bill implements stronger rules for foreign residents owning Australian housing to reduce pressure on housing affordability.

Firstly, foreign residents will be denied access to the main residence capital gains tax (CGT) exemption from 7.30pm AEST on 9 May 2017 except in the case of certain life events that occur within six years of losing their Australian residency.

A grandfathering arrangement will apply for properties already held at that time, with the change taking effect for these properties from 1 July 2020. This will provide foreign residents sufficient time to consider and plan their affairs.

These amendments will also allow foreign residents to continue to access to the main residence exemption within 6 years of becoming a foreign resident if a CGT event occurs to their Australian property and during that period they experience certain life events - their death, or divorce (and equivalent) or terminal illness, or the death or terminal illness of their spouse, or child who is under 18 years old.

Secondly, this schedule addresses an integrity issue with the CGT rules for foreign residents that hold indirect interests in Australian real property, such as land, from

7.30pm AEST on 9 May 2017.

This reform addresses an integrity issue with the principal asset test to require a foreign resident to consider any interests held by its associates, if it disposes of an indirect interest in Australian real property for example by selling shares in a land rich company.

This ensures the principal asset test cannot be circumvented by disaggregating holdings of membership interests.

These foreign resident CGT changes, together with the 2017 expansion of the foreign resident CGT withholding regime, are expected to have a gain to revenue of $510.0 million over the forward estimates period to 2020-21.

Schedule 2 to this Bill delivers on the Government's commitment to introduce tax incentives to boost investment in affordable housing, to create the right incentives and improve outcomes for those in need.

This Bill allows resident investors in qualifying affordable rental housing to obtain a CGT discount of up to 60 per cent from 1 January 2018. Under current arrangements, individuals generally receive a 50 per cent capital gains discount for CGT assets held for at least 12 months. This includes residential investment properties that are supplied for affordable housing.

The additional CGT discount will be available to resident investors who hold affordable housing directly or through certain trusts, such as holding units within a managed investment trust.

To qualify for the additional discount, the affordable housing must be held for a period of at least three years from the start date of this measure, and be managed through a registered community housing provider in accordance with state and territory housing policies and registration requirements.

This measure encourages increased investment in affordable rental housing and forms part of the Government's housing affordability package announced in the 2017-18 Budget.

This measure is estimated to have a cost to revenue of $15.0 million to 2020-21.

Schedule 3 of this Bill is a technical amendment that introduces a reconciliation payment for the near-new dwelling exemption certificate that has already been introduced through Regulation changes on 24 June 2017. This change supports the streamlined foreign investment framework announced in the 2017-18 Budget.

This amendment provides the mechanism for imposing a fee on the developer for each near-new dwelling sale to foreign persons.

I would like to thank those that contributed to the public consultation on the draft legislation for these measures.

In conclusion, the Government through this Bill is creating the right incentives as part of our comprehensive and targeted plan to improve outcomes across the housing spectrum.

Full details of these measures are contained in the Explanatory Memorandum.

FOREIGN ACQUISITIONS AND TAKEOVERS FEES IMPOSITION AMENDMENT (NEAR-NEW DWELLING INTERESTS) BILL 2019

This Bill contains technical amendments that support changes announced in the 2017-18 Budget that streamlined the foreign investment framework.

These amendments introduce a reconciliation fee on developers for dwellings sold to foreign persons under a near-new dwelling exemption certificate. The near-new dwelling exemption certificate was introduced through regulatory amendments that took effect from 24 June 2017.

Full details of the measure are contained in the Explanatory Memorandum.

Debate adjourned.