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Thursday, 24 June 2010
Page: 4275


Senator SIEWERT (11:04 AM) —This is an issue that I have been passionate about for some time. In fact I initiated the Senate inquiry into special disability trusts that I think has led—along with the very strong community campaign—to the government putting forward the Tax Laws Amendment (2010 Measures No. 3) Bill 2010. On the whole we support this legislation. We are pleased that the government has taken up the recommendations and I encourage them to look again at some of the recommendations they have not taken up—and they know very well that I was going to say that! I remind the government that those recommendations had cross-party support. The report from the committee was unanimous and it also had the support of parents, particularly parents of children with a disability. So we are pleased with this bill on the whole and we are supporting it.

We do have a concern around schedule 4. We discussed this in estimates and I am aware that the government knows that there are some parents who have concerns. As has been articulated, it makes changes to the taxation of unexpected income for special disability trusts. Schedule 4 amends division 6 of the Income Tax Assessment Act so that unexpected income from special disability trusts is taxed at the relevant principal beneficiary’s personal tax rate rather than automatically at the top personal rate plus the Medicare levy. While the lowering from the top tax rate to the beneficiary’s personal marginal rate for unexpected income is a step in the right direction and we acknowledge that, another change in the bill means that unexpected income would now be grossed up from the expanded STD income instead of only the expended income being attributed to the beneficiary for assessment purposes, as is currently the case. While we acknowledge that overall it benefits more people—which is why we are supporting the legislation—it does not benefit all people. We are aware that there are a group of people who have some concerns about this, so I did want to put it on the record and ask the government to do something. This particular change will mean that beneficiaries who have a personal income may have to pay tax when they previously did not, or they may pay an increased tax or be forced into a higher tax bracket—which of course will have an impact on them. I would ask the government and the department to keep an eye on whether this is having an adverse impact on a particular group of people, because there are concerns that it may put some people off setting up trusts—and, of course, these changes are designed to encourage more people to take up the trusts.

Former health minister Kay Patterson established the special disability trusts. She did a lot of hard work on this and is very passionate about this concept. We initiated the Senate inquiry because people were not taking the trusts up at the rate we expected. That is why the inquiry was held—to identify the barriers. We acknowledge that the government has understood the fact that there were some barriers. We are a little concerned that the changes may be a barrier to a particular group of people and we ask that the government monitors that and in the future considers taking some further action if it is proved that the changes are a significant barrier. I want that on the record because it has been raised with me. I know it has been raised with the government and I am pretty certain it has also been raised with the opposition. We ask that the government follow that up. I thank the government and ask them to review those amendments which have not been followed up. The Greens will be supporting the bill.