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Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013, Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013
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Bushby, Sen David
Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013, Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013
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- Start of Business
- Banking Amendment (Unclaimed Money) Bill 2013
- Australia Council Bill 2013, Australia Council (Consequential and Transitional Provisions) Bill 2013
- PERSONAL EXPLANATIONS
QUESTIONS WITHOUT NOTICE
Carbon Pricing, Mining, Asylum Seekers
(Brandis, Sen George, Conroy, Sen Stephen)
Cost of Living
(Singh, Sen Lisa, McLucas, Sen Jan)
(Ronaldson, Sen Michael, Conroy, Sen Stephen)
(Di Natale, Sen Richard, Conroy, Sen Stephen)
National Broadband Network
(Birmingham, Sen Simon, Conroy, Sen Stephen)
(Brown, Sen Carol, Ludwig, Sen Joe)
(Macdonald, Sen Ian, Conroy, Sen Stephen)
(Wright, Sen Penny, Lundy, Sen Kate)
(Boswell, Sen Ronald, Conroy, Sen Stephen)
(Sterle, Sen Glenn, Carr, Sen Bob)
- Carbon Pricing, Mining, Asylum Seekers
- QUESTIONS WITHOUT NOTICE: ADDITIONAL ANSWERS
- QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS
- REGULATIONS AND DETERMINATIONS
- Australian Jobs Bill 2013
- Tax Laws Amendment (2012 Measures No. 6) Bill 2012
Customs Amendment (Anti-dumping Measures) Bill 2013, Customs Tariff (Anti-Dumping) Amendment Bill 2013
- Second Reading
- Third Reading
- Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013
- Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013, Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013
- PRESIDENT, The
- Schultz, Mr Alby, MP, Lawrence, Sister Madeleine, Aston, Professor Michael Antony
- Australian Securities and Investments Commission
- Climate Change
- Leichhardt, Dr Ludwig
- Tasmania: Show Some Respect Campaign
- Mees, Dr Paul
- Goods and Services Tax
- International Conference on Population Development
- Animal Welfare
- Victoria: Community Engagement
- Aboriginal Land Rights and Other Legislation Amendment Bill 2013, Yunupingu, Dr M
- Bendigo Electorate: Ms Sarah Sheedy
- Vinnies CEO Sleepout, Homelessness
- Great Southern Region of Western Australia
- Sri Lanka, Forestry
- Aircraft Noise
Tuesday, 25 June 2013
Senator BUSHBY (Tasmania—Deputy Opposition Whip in the Senate) (21:20): These composite bills, the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 and the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013, are, again, subject to the guillotine that has been imposed by the government on all bills passing through this place this week. In the case of these two bills, we have less than two hours to debate them. Senator Cormann just touched on a couple of the schedules and noted that he did not have the opportunity to go through them properly. I do not know that I will have the opportunity to go through each of them in detail, but I think it is worth, for the record, looking at the scope of these bills.
I will start with the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 and the details set out in the Bills Digest. I am going to go through the scope of what these bills actually cover, because there are a lot of things—they are complex and they are matters that deserve proper scrutiny and debate in this place.
The Bills Digestsays:
Specifically, the Bill:
amends the Income Tax Assessment Act 1997 (ITAA 1997) … the Superannuation (Departing Australia Superannuation Payments Tax) Act 2007 … and the Superannuation (Unclaimed Money and Lost Members) Act 1999 … to ensure that income tax is generally not payable on interest paid by the Commonwealth on unclaimed money from 1 July 2013
amends the Fringe Benefits Tax Assessment Act 1986 … to align the rule for calculating airline transport fringe benefits with existing in-house property fringe benefits … and in-house residual fringe benefits … Correspondingly, there is an update to the method for determining the taxable value of airline transport fringe benefits
amends the ITAA 1997 to allow participants in the Sustainable Rural Water Use and Infrastructure Program … to choose to make payments received under the program non-assessable non-exempt … income … in which case expenditure related to infrastructure improvements required by the program are then non-deductible as they do not form part of the cost of any asset
amends the Superannuation Industry (Supervision) Act 1993 … to prescribe requirements for acquisitions and disposals of certain assets between self managed superannuation funds … and related parties in order to increase transparency and compliance
amends the ITAA 1997 to introduce the loss carry-back tax offset, which allows a corporate tax entity to carry back all or part of a tax loss (of up to $1 million) from the current year against income tax payable for either of the two preceding income years
amends the ITAA 1997 to make consequential amendments made necessary by the introduction of the loss carry-back tax offset and
makes miscellaneous amendments to address minor technical deficiencies and legislative uncertainties within taxation laws, particularly the Minerals Resource Rent Tax Act 2012 … and the Petroleum Resource Rent Tax Assessment Act 1987 …
The scope of the other bill, the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013, is similarly large. On that bill, the Bills Digest says:
Schedule 1 amends the Income Tax Assessment Act 1997 … to insert a definition of documentary—
that is probably not so large in scope—
Schedule 2 amends the ITAA 1997, Tax Laws Amendment (2011 Measures No. 1) Act 2011 (2011 Measures Act) … and the Tax Laws Amendment (2012 Measures No. 1) Act 2012 … to exempt certain ex-gratia payments made in respect of natural disasters from income tax
Schedule 3 amends the A New Tax System (Goods and Services Tax) Act 1999 … to allow certain entities to continue to pay their GST by instalments
Schedule 4 amends the ITAA 1997 to update the list of deductible gift recipients
Schedule 5 amends the Superannuation Industry (Supervision) Act 1993 … to expand the duties of trustees of particular superannuation funds to establish and implement procedures to consolidate accounts
Schedule 6 amends the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 … to make changes to the superannuation co-contribution
Schedule 7 amends the ITAA 1997 and the Income Tax Assessment Act 1936 … to consolidate the dependency tax offsets and
Schedule 8 amends the ITAA 1997 and the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 … to clarify the operation of certain aspects of the Taxation of Financial Arrangements … regime.
So clearly, as you can tell from the list of what these two bills are trying to achieve, their scope is quite broad.
There are a lot of potential issues in these bills and they are both deserving of a proper and full debate in this place. The fact that they are not getting a proper and full debate—the fact that the debate on this has been confined to an hour and 50 minutes—is not good for the country. It is not good for taxpayers. It is not good for the government. These things deserve a proper examination and a proper debate on the floor of parliament.
These composite bills, as I have just outlined, deal with a range of changes to the taxation and superannuation system that, on the whole, the coalition will not be opposing. However, we will be moving amendments.
Schedule 1 of the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 deals with interest on unclaimed money. It ensures income tax is generally not payable on the interest paid by the Commonwealth on unclaimed money from 1 July 2013. However, the coalition notes that the Gillard Labor government was, when it was still maintaining the pretence that a budget surplus would be delivered this financial year, using this measure as part of that desperate attempt to keep the illusion of their ability to deliver a budget surplus alive for just a little bit longer. In its MYEFO released in October, which was much earlier than usual, the government promised their paltry surplus of just over $1 billion. As mentioned by Senator Cormann earlier, three-quarters of that promised surplus was expected to come from the unclaimed money bill and I think Senator Cormann highlighted very well that the unclaimed money is actually money that belongs to other people. There may well have been some interjections in this place saying that that was not true, but the reality is: if the government are counting it as revenue towards their surplus, they are expecting to keep it, at least for the purposes of putting forward their achievement of a surplus, which of course they have not managed to do.
Over the first six months of this year, the government anticipated that this measure—taking money off pensioners and others who have money in accounts they have not touched for some time—would raise over $760 million in additional revenue. This figure included $555 million from lost super, with the rest from lost bank accounts of individuals or companies. That is right: it was not a budget surplus which was promised on the basis of sound economic policy or good fiscal outcomes; it was a budget surplus constructed on the basis of taking money by raiding the forgotten bank accounts of everyday Australians and the accounts of those who were quite happy to have some of their hard-earned assets parked as cash in a bank account for an extended period. We heard from Senator Cormann that that may have been because people were overseas for a number of years. I know that my own mother, who is a pensioner, received a letter regarding her bank account advising her that she had money in an account that would have been taken if she did not do something about it. Fortunately for her, she was on top of that and managed to deal with it. I think she manufactured a transaction to make sure it did not happen.
Senator McLucas interjecting—
Senator BUSHBY: But how ridiculous is it that she had to manufacture a transaction in order to keep her own money in her own account! Senator McLucas is sitting over there nodding, and saying: 'There you go, you see? She knew about it and she sorted it.' But the fact is that she had to go in and manufacture a transaction on an account that she did not want to transact on just so the government would not take her money out of her account and put it in their account to make it look like they had achieved a surplus.
Under pressure during consideration of the unclaimed money bill, the government did advise the Senate Standing Committee on Economics of its intention that this interest would be exempt from tax. The rushed implementation of these changes was a consequence of the government's desperation, as I said, to fill yet another budget black hole. The government's claim that the financial impact of this measure is nil as they have not budgeted on tax from interest payments suggests to the coalition that this was yet another oversight in a rush to implement yet another policy thought bubble. That is something this government has become famous for and they have a pile of failed policies to prove it.
Schedule 2 of this bill deals with airline transport fringe benefits. It is supposed to improve consistency across the fringe benefits tax law and reduce the complexity of the law. Currently, the taxable value of an airline transport fringe benefit is its value less the employee contribution. Under this change, the taxable value of an airline transport fringe benefit will be aligned with the in-house benefit valuation method. This will be calculated as 75 per cent of the standby airline travel value of the benefit less the employee contribution. This is a technical change to the law that should simplify this particular area. The coalition supports this schedule.
Schedule 3 of this bill allows participants in the Sustainable Rural Water Use and Infrastructure program to choose to make payments received under the program free of income tax, including capital gains tax. If this choice is made by participants under this scheme, expenditure related to infrastructure improvements under the program is non-deductible. Alternatively, participants can decide to stay under the current rules. The program provides funding to irrigators to improve water efficiency. Some of the resulting water savings are then transferred to the government to be used for environmental watering. If chosen by the taxpayer, the new arrangements remove a cash flow gap that currently exists between the timing of tax liabilities and tax deductions. The financial impact of this measure is around $45 million over the forward estimates. The coalition have previously been supportive of this change, which was originally announced over two years ago in February 2011, and we continue to endorse this measure even though we have had to wait almost 2½ years for it to be introduced.
I note that schedule 4 of this bill, to amend the Superannuation Industry (Supervision) Act to prescribe requirements for the acquisition and disposal of certain assets between self-managed superannuation funds and related parties, was removed by the government prior to debate in the other place.
That brings me to schedules 5 and 6 of this bill. Schedule 5 implements the loss carry-back for small and medium-sized businesses linked to the mining tax and schedule 6 includes the necessary consequential amendments. The new rules give a corporate tax entity the choice of carrying back all or part of a tax loss from the current income year or from the preceding income year against an unutilised income tax liability for either of the years before the current year. This measure applies to assessments for the 2012-13 and later income years. A transitional, one-year carry-back period applies for the 2012-13 income year. If the loss carry-back conditions are satisfied, a corporate tax entity can get a refundable tax offset for the losses it chooses to carry back. The financial impact of this measure is around $700 million over the forward estimates.
These two schedules implement the government's announced loss carry-back measure, a measure linked to and supposedly funded by the government's minerals resource rent tax. But, as we all know in this chamber—including, I am sure, and much to the frustration of, the Greens, who have joined with the government to try to slay the goose that has laid the golden eggs in this country over the past decade or so; and despite the promises of the government and the view of the Greens that the mining industry can be taxed exponentially without any impact on activity or consequential falls in tax revenue—the minerals resource rent tax is a fundamentally flawed tax that essentially raises no revenue. In fact, according to the government's monthly financial statement for April 2013, which was released after this year's budget, the MRRT has raised just $310 million in gross terms, with no more payments due this year. That is about 10 times less than the net estimate from the 2012-13 budget and about five per cent of what the tax was originally predicted to raise.
The government negotiated the design of the MRRT exclusively and in secret with the managing directors of Australia's three biggest mining companies. Apparently even Labor's own Treasury officials were locked out of proceedings, instead instructed to be on the end of a phone line should their input actually be required into one of the country's biggest new taxes. True to form, this government also excluded any other mining industry stakeholders and state governments from the negotiating process.
The coalition condemned the MRRT as a great big new tax on the mining industry right from the start. We predicted the fiscal disaster that has come to fruition since its implementation and we continue to oppose it. The Treasurer has overestimated the gross revenue from the MRRT and has underestimated the cost of the various concessions he and Julia Gillard made in their MRRT heads of agreement, yet the Gillard Labor government have spent all the money they expected to raise from the MRRT and more—primarily as a result of them linking various expenditure measures, including loss carry-back, to the MRRT, as dealt with in these bills.
Additionally, the government cannot afford to continue adding to the $172 billion in accumulated deficits it has achieved over its first four completed years and the anticipated two large budget deficits now forecast for this year and the next. Furthermore, the government's decision to allow loss carry-back ignores that two-thirds of small and medium-sized enterprises are not incorporated and so cannot benefit from the measure. This is because only businesses with franking accounts can avail themselves of this measure. Unincorporated businesses that must compete with those using carry-back will be handed a competitive disadvantage by this measure, which is completely unacceptable. The coalition cannot support these schedules, which are wholly linked to the government's failed MRRT, which we are vehemently against and which we will abolish if we are successful at the 14 September election.
I now move to the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013. Again, this bill deals with a range of changes to the taxation and superannuation system, including six tax schedules and two superannuation schedules, as I went through earlier. Schedule 1 amends the Income Tax Assessment Act 1997 to define 'documentary' in accordance with the Australian Communications and Media Authority guidelines and to restore its intended meaning. It also clarifies that the exclusion of light entertainment programs from film tax offset eligibility does extend to game shows as the offset is designed to encourage Australian investment in film production. The coalition considers these amendments to be sensible. They are good integrity measures that better target eligibility for and access to the key film industry tax concession.
The coalition also supports measures in schedule 2, which exempts from income tax any ex gratia disaster income recovery subsidy. Schedule 3, relating to the GST instalment system, and schedule 4, adding six entities as deductible gift recipients, in addition to schedule 7 and schedule 8, are also supported by the coalition.
However, the coalition is concerned with the changes made in schedule 6 of this bill. Once again, with schedule 6 the Gillard government seeks to quietly reduce the Howard government's superannuation co-contribution scheme for low-income earners. It halves the government's maximum co-contribution under the scheme from the current $1,000 down to $500. Under the Howard government, the government's super co-contribution for low-income earners was up at $1,500. It also again reduces the government's co-contribution matching rate, this time cutting it in half, from the current dollar for dollar down to 50c for every dollar put in by low-income earners. This schedule also halves the income band across which the co-contribution phases out. Instead of the higher income threshold being set $30,000 above the lower income threshold, as it is currently, it will be reduced to $15,000. Finally, indexation of the lower income threshold, which has been frozen for two years already, will be frozen for another income year.
These amendments will commence from the date of royal assent and apply from the 2012-13 income year. The financial impact of these amendments is around $330 million per year—another cut to the super co-contribution benefits of low-income earners and another demonstration by an out-of-touch government that they are not the friend of low-income earners saving for retirement through superannuation that they try and present themselves as.
The reality of what they are doing in this bill is in stark contrast to the class war they were pedalling on superannuation earlier this year. While they were running with their class war rhetoric, they failed to inform the public that this cut to the co-contribution regime will be the sixth change they have made to it, which now represents a cut to those benefits of more than $3.3 billion. That is $3.3 billion that is not going into the superannuation fund accounts of Australians, particularly low-income Australians, by definition.
Superannuation is integral to our retirement framework in Australia. Understandably, as a result, Australians seek certainty and stability when investing in their super because it is a nest egg and it will determine the quality of lifestyle that Australians will achieve in their retirement years. This Labor government has not afforded Australians that certainty, with both their policies and their cabinet constantly changing. Not only that but, by constantly attacking our superannuation system, the Labor government is creating generations of retirees who will have an increased reliance on the public purse in years to come because incentives to invest in superannuation are being removed.
The coalition knows there is a better way and we have given our word to the Australian public that an Abbott-led Liberal government will restore certainty and stability to our superannuation system. However, given the precarious state of the budget handed down earlier this year, the coalition has no choice but to not oppose the passage of these bills through the Senate tonight. The appalling mismanagement of the budget, the waste and the poorly targeted spending have all helped create a clear budget emergency. The government is consequently scrambling round implementing new and increased taxes—incidentally, there have been 30 new or increased taxes under this government—with Australians paying for Labor's mistakes. The cost for superannuation account holders is now around $9 billion, money that Australians will not be able to use to support themselves in retirement, money taken off Australians to subsidise the wanton spending of the government.
I wish to place on the public record yet again the coalition's disgust with the way the Gillard Labor government has sought to guillotine debate in this place this week, ramming bills through this chamber without due consideration or regard for parliamentary process. As has already been noted this week, under the Howard government, in the three years of the Liberal-Nationals control of the Senate between 2004 and 2007, only 32 bills were guillotined. In those cases we never saw the use of such Draconian so-called time management. We at least allowed debate to occur and only brought that debate to an end after reasonable debate had actually taken place. However, in the three years since the Greens-Labor alliance achieved their cosy majority in the Senate, over 215 bills will have been guillotined through this place. There is no transparency in this process, just extreme arrogance from a desperate government in its dying days. It is disgraceful and it is no way to run the making of laws in our great nation. The sunlight that was pledged to the Australian people three years ago with such public fanfare has failed to make it into this chamber.