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Monday, 23 November 2015
Page: 13238


Ms O'DWYER (HigginsMinister for Small Business and Assistant Treasurer) (13:23): Firstly, I would like to join with the Assistant Minister to the Treasurer and concur with his comments. I would also like to thank those members who have contributed to this debate on the Tax and Superannuation Laws Amendment (2015 Measures No. 5) Bill 2015. This bill amends various taxation laws to implement a range of improvements to Australia's tax laws. These changes are part of the government's commitment to a fairer and simpler tax system.

Schedule 1 to this bill modernises the methods for calculating tax deductions for work related car expenses from the 2015-16 income year by streamlining and updating the available methods and rates for claiming work related car expenses. Schedule 1 removes two of the least utilised methods for calculating work related car expenses. Used in just two per cent of claims, the one-third actual expenses and the 12 per cent of original value methods will be abolished. Taxpayers can continue to calculate their expenses using the cents per kilometre method or the logbook method, depending on their needs and travel. Secondly, the existing three rates for the cents per kilometre method will be replaced with a new single rate of 66c per kilometre, which will be updated annually by the Commissioner of Taxation. Having three different rates for different engine sizes adds complexity to claims for taxpayers. This change will better align deductions for car expenses with the average costs of operating a motor vehicle and is based on the most recent industry data of the top five selling vehicles in Australia. Also, the existing rates are being modernised in order to apply to modern electric vehicles. For those taxpayers who travel more than 5,000 business related kilometres, the logbook method will not change. This method still enables them to claim their actual expenses based on their actual work related business use. The original methods and rates were set in the 1980s. It is clear based on the methods actually used and up-to-date industry information on current running costs that these rates and methods are outdated. These changes will raise $845 million over the forward estimates and will modernise the way in which we calculate our work related car expenses.

Schedule 2 to this bill will better target the zone tax offset to exclude fly-in fly-out and drive-in drive-out workers as part of the 2015-16 income year. This meets the government's priority to deliver a fairer taxation system, ensuring only those genuinely living in specified geographic zones are entitled to the offset. The zone tax offset was introduced in 1945 and was intended to compensate recipients for the disadvantages of living in remote areas, including isolation, uncongenial climate and higher cost of living. It was the policy intention of the zone tax offset to target Australians genuinely living in these regional areas. However, now we see that fly-in fly-out workers flying in from Perth, Brisbane or Sydney—areas otherwise ineligible for the zone tax offset—are able to spend over 183 non-consecutive days in these distant areas of Australia and claim the offset. This is clearly not the intent of the original policy and is unfair on those Australian families whose genuine place of residence leaves them contending with the isolation, uncongenial climate and higher cost of living associated with having their home in these remote areas. It is estimated that up to 180,000 people currently claim the zone tax offset based on where they work rather than where they live. Schedule 2 to this bill amends the law so that only those residents genuinely living in the designated geographic zones are eligible to claim the offset and is expected to raise $325 million over the forward estimates. This change is consistent with the original policy intent of the offset, ensuring that it is well targeted and sustainable. Those fly-in fly-out workers whose usual place of residence is in one zone but who work in a different zone will retain the zone tax offset entitlement associated with their usual residence.

Schedule 3 to this bill will improve fairness in the tax system by placing a cap on uncapped entertainment benefits available to employees of certain not-for-profit organisations and by making these benefits reportable. Under this bill, employees of certain not-for-profit organisations will no longer be able to salary sacrifice an unlimited amount of entertainment benefits, without any FBT implications. The uncapped concession is not available to other taxpayers. In addition, these exempt benefits have not been reportable for eligibility tests applicable to government payments. The government recognises that some not-for-profit organisations rely on this concession to attract, recruit and retain staff. Therefore, rather than removing the concession entirely, the government will retain concessional treatment for these benefits by imposing a $5,000 cap. Employees of affected not-for-profit organisations will still have access to the standard FBT concession caps, which provide an FBT exemption or rebate up to a set cap. These caps are unaffected by this bill. This measure is consistent with the government's objective to improve fairness in the tax system.

The government is committed to reducing the compliance burden on the taxpayers of Australia. One way is by providing a wider range of information to taxpayers before they lodge their tax returns. This would mean people would need to do less themselves. Schedule 4 to this bill creates a new third party reporting regime. It requires third parties to report information to the Commissioner of Taxation on the following four types of transactions: government grants and payments, transfers of real property, transfers of shares and units and unit trusts, and business transactions made through payment systems. This will then enable the commissioner to provide more information to assist taxpayers in calculating their tax liabilities. The measure also strengthens the integrity of the tax system.

The government recognises that a balance must be made between the compliance benefits to millions of taxpayers and the compliance costs imposed on third party reporters. Greater use of technology, improved management and information and better design of processes will enable more automation of reporting. The government expects that the commissioner will work with reporters to streamline processes, reduce compliance costs and avoid duplication in implementing this reporting regime. These four measures continue this government's commitment to a fair and sustainable tax system. I commend the bill to the House.