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Tuesday, 26 May 2009
Page: 4405

Mr PERRETT (7:29 PM) —I too rise to address the Tax Laws Amendment (2009 Measures No. 3) Bill 2009. This bill contains amendments to three areas of tax law. The first amendment concerns PAYG instalments. The bill reduces PAYG instalments for 2009-10 for taxpayers who pay quarterly instalments. It also allows eligible taxpayers who have voluntarily registered for GST and who choose to remit GST annually to make their PAYG instalments annually. Secondly, the bill makes minor amendments to the Petroleum Resource Rent Tax Assessment Act 1987 to reduce compliance costs for taxpayers. Thirdly, the bill lists a couple of new organisations as deductible gift recipients. I know that such a listing is always eagerly looked forward to by people who do good work in our community.

I will speak firstly to the amendments concerning PAYG instalments, which are the most significant measures in this bill, as discussed by the previous speaker. These changes will deliver direct benefits to small business. Under current arrangements, the GDP adjustment factor calculated under the present income tax law would be around nine per cent. Taxpayers earning business or investment income pay quarterly instalments during the year towards their final tax liability so they do not have an unmanageable tax bill at the end of the year. These instalments are calculated based on the GDP adjustment method. It is based on the taxpayer’s taxable income from the previous year adjusted by the GDP factor, which reflects GDP growth over the previous two years. In simple terms, as I understand it, the instalments are based on last year’s taxable income plus expected profit growth.

However, these are unusual days and the GDP factor—which, as I said, would be at nine per cent—is an exaggeration of the kind of profit growth that most small businesses can expect at the moment. That might be different, perhaps, for some of those businesses that have thrived over the last three or six months—receivers, perhaps. I note that some of the major supermarket chains have also thrived. Obviously people are eating in.

Mr Neumann —Liquidating.

Mr PERRETT —People are liquidating, as is suggested by the member for Blair. Video hire stores are also doing very well. People are obviously staying home and cooking their own meals, although I am told—not by the hairdressers that I frequent but by the hairdressers that I talk to in my electorate; I, of course, go to a barber—people are not necessarily scrimping on their hair. People are still prepared to spend their money on looking good, even if they do not have anywhere to go. They are all dressed up with nowhere to go. Apart from those specific niche businesses, most businesses have not been growing at nine per cent.

Cash flow is the lifeblood of small businesses, as we on this side of the House well know. The Rudd government does not want businesses paying instalments far above their actual tax liability. In these tough times, it is more important than ever for small businesses to retain cash flow and ensure they can continue to invest in their businesses. That is why this bill will set the GDP adjustment for the 2009-10 year at not nine per cent but two per cent.

This amendment will generate around $720 million in cash flow for small businesses. Small businesses in the electorate of Blair, small businesses in the electorate of Moreton and small businesses in the electorate of Port Adelaide will benefit from this government adjustment. Self-funded retirees and other eligible taxpayers will obviously also benefit. Most importantly, this measure will ensure that $720 million is not lying around in the coffers of the tax department but instead continuing to stimulate business investment, which means more jobs for Australia. Obviously, we on this side of the House understand that the current climate is all about jobs, jobs, jobs.

This bill also introduces some flexibility regarding PAYG instalments. It amends the Taxation Administration Act 1953 to allow taxpayers who are voluntarily registered for GST and who choose to pay GST annually to also make their PAYG instalments annually. This will eliminate unnecessary compliance costs for taxpayers.

These measures build on the Rudd government’s significant efforts to support small business during these tough economic times—times that almost every person in this room tonight has never seen in their lifetime. These are tough economic times. It is funny—we do not feel like we are in a flickering black-and-white newsreel, but I guess in 75 years time people will look back at this time and say this was a significant economic downturn. That is the reality.

Obviously, we on this side of the House understand that small business is the backbone of the Australian economy. We have some 1.9 million small businesses, employing almost four million Australians. I think the member for Blair was one of those small business people. I think of the many small businesses in my electorate, which provide employment and stimulate economic growth. There are successful businesses like MiniMovers, which was set up by Michael O’Hagan; Michael’s Oriental Restaurant at Eight Mile Plains, where I seem to have had every second meal over the last couple of weeks; the Framing Corner at Sunnybank, which does so much work; the Inn Florist at Moorooka, which always looks after me on Anzac Day and Remembrance Day and on my wedding anniversary, when I remember it; Chaotech, which was set up by Rex Manderson at Rocklea and which produces precision steel machine parts and is also developing a plant to produce soil carbon that will hopefully take advantage of the green vegetation in our environment and plough it back into the farms in the surrounding area; the Sunni Bakery and Sunnybank Plaza News at Sunnybank; 3E at Salisbury, which looks after the printing of my newsletters; the Mu’Ooz African restaurant at the heart of Moorooka in the little strip of Africa; the Sunnybank Oriental Restaurant; the Landmark Restaurant; any of Danny Yo’s many restaurants; and my dentist, Ken Martin, at Graceville. All these small businesses will benefit from the improvements we are bringing in tonight.

The Rudd Labor government is doing whatever it can to support businesses such as these. We are increasing and extending the small business and general business tax break. We are lifting the tax break from 30 per cent to 50 per cent and extending it to apply to eligible assets acquired between 13 December 2008 and 31 December 2009. Businesses need to make sure they take advantage of this wonderful opportunity. The 50 per cent rate applies to new tangible assets over $1,000 acquired by small businesses with a turnover of less than $2 million a year. It includes items like computers, electric tools, furniture and motor vehicles, to name but a few. We are also establishing a small business support line to assist small businesses during the global recession. Sometimes a bit of helpful advice might make the difference between a business surviving or getting into difficulties.

We are providing $10 million over two years to help small businesses go online and to open up to new markets through e-commerce. We are introducing a new research and development tax credit at 45 per cent for companies with an annual turnover of less than $20 million. I am proud of all these measures because I know that for some small businesses in Moreton it will be the difference between survival and bankruptcy. For some employees it will be the difference between a solid job and unemployment. These are good things to do because they are good for jobs and good for the economy.

This bill also makes some minor changes to the petroleum resources rent tax. Among a range of minor amendments the bill allows taxpayers with petroleum projects offshore to calculate their petroleum resource rent tax liability in a foreign currency. This will simplify tax compliance for taxpayers who operate in a foreign currency.

Finally, this bill welcomes three new organisations to the list of deductible gift recipients. Taxpayers will be able to claim income tax deductions for gifts to Diplomacy Training Program Ltd, which provides training for staff and representatives of NGOs in the Asia-Pacific region to help promote good governance and human rights. Obviously, it makes good sense to help where we can with our neighbour’s yard because that makes our yard that much safer. Also included is the Royal Institution of Australia Inc., an Adelaide based science research centre. I am sure the member for Port Adelaide would support this. The third included is the Leeuwin Ocean Adventure Foundation. This great organisation gives young people the experience of life on the tall ship Leeuwin. They learn skills in sailing and navigating but, more importantly, develop teamwork, confidence, responsibility and community spirit. This bill ensures that these organisations will be able to collect tax deductible gifts.

This legislation demonstrates how the Rudd government continues to respond to the dynamic global economy and the challenges that brings for Australian businesses. It shows that we are prepared to listen and respond with practical measures to help meet the emerging needs of business. I commend the bill to the House.