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Wednesday, 17 August 2011
Page: 8328


Mr TONY SMITH (Casey) (13:12): On behalf of the opposition, I rise to speak on the Tax Laws Amendment (2011 Measures No. 6) Bill 2011, which was introduced into this House on 22 June by the Assistant Treasurer, the member for Maribyrnong. This bill has three schedules. I will say at the outset that the coalition will not be opposing this bill. As is often the case and as I have said on many previous occasions, bills such as this correct unintended errors, add to the tax law in other important ways and ensure the ongoing operation of an efficient and fair tax system. This bill is no exception.

I will deal with each of the three schedules. The first schedule exempts the outer regional and remote payment made under the Better Start for Children with Disability initiative from income tax. The second schedule provides an exemption for fringe benefits tax for transport, specifically with regard to circumstances where an employee is receiving fringe benefits in a remote overseas location—and I will come back to the detail of that. Finally, as is often the case, this bill updates the deductible gift recipients list in a number of important respects.

I will deal with the first schedule. The Assistant Treasurer outlined in his tabling speech in some detail the proposed operation of this in schedule 1. As many members will be aware, there are already payments made under the program; I outlined the Better Start for Children with Disability initiative. Those payments are important payments for a range of disabilities, including sight or hearing impairment, cerebral palsy, Down syndrome and a number of others. With respect to eligible children with those disabilities in remote and regional areas, there is an additional payment of $2,000 which is being provided to take account of the additional costs resulting from the distance involved in living in those remote and regional areas. The effect of this schedule is simply to ensure that the additional payment is not subject to income tax. That is the sort of schedule we see in these tax laws amendment bills when important benefits of that nature are provided. Without this schedule, the tax law would automatically tax those additional payments, and this schedule sensibly ensures that the $2,000 payment is exempt from income tax calculations.

The second schedule deals with overseas fly-in fly-out arrangements with respect to fringe benefits tax. Essentially at the present point in time there is an exemption from fringe benefits tax for transport from an employee's usual place of residence to their place of employment, where the employee is employed under what is commonly known as fly-in fly-out arrangements and the usual place of employment is a remote location in Australia or on an oil rig or another installation at sea. The Assistant Treasurer outlined in his second reading speech the intention of this schedule essentially to extend that exemption in the same way where the employee is an Australian resident employed in a remote area overseas under a fly-in fly-out arrangement.

That makes sense. The point we on this side of the House would make is this has been necessitated by an earlier change to the taxation law. That was a change announced and legislated by the government back in 2009. It relates to foreign employment income for Australians working overseas. That change meant that Australians in this circumstance who had been exempt from Australian income tax to a level would no longer be. A corollary of that is because they may have been receiving fringe benefits before and they were not subject to income tax now, under the change to that law, there was the potential for them to be double-taxed. I would commend members who are interested in this point to read the explanatory memorandum which outlines in detail this necessity on page 10 at 2.15:

Such benefits were previously exempt from FBT because no FBT liability arose in relation to benefits provided to employees whose salary or wages were fully exempt from income tax. Removing the income tax exemption for affected individuals has brought these individuals within the FBT regime.

It goes on to outline in great detail how that would occur. At 2.19 on the same page it states:

Double taxation may occur because Australia taxes fringe benefits in the hands of employers, whereas most other countries that tax fringe benefits, tax them in the hands of employees.

Tax law is a very detailed area of law as you would appreciate, Madam Deputy Speaker. But the point from this side of the House is that this is something that the government themselves should have recognised at the time of that change a couple of years ago. I make the point in the House that it is a technical oversight. This oversight was recognised prior to the introduction of this bill. In fact, the announcement of the change was made back in 2010, I believe, by the then Assistant Treasurer. I understand it has taken until now to make it into the tax laws amendment bill. The explanatory memorandum was in a media release on 18 November 2010, when it was announced that there would be this change in a tax laws amendment bill.

As I said at the outset, the final schedule updates the deductible gift recipients list. It adds to that list the New Zealand government's Christchurch Earthquake Appeal Trust and the Cancer Australia Gift Fund. It makes some other consequential changes, including renaming some recipients already on the list. It also repeals some from the list, but only in cases where those names are now redundant and have been replaced by either new names or, in one case I think, a merger of a couple of organisations with the same purpose. The addition of those two to the list is something that all members of this House and the Australian public would welcome. I commend the bill to the House.