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Monday, 13 February 2012
Page: 1006

Ms OWENS (Parramatta) (16:23): I am looking forward to speaking on the Tax Laws Amendment (2011 Measures No.9) Bill 2011. I have said in this place before that I quite like tax laws amendment bills. Some of my constituents have now found me out and approached me in the street and questioned my character over that, but I do admit it. Quite often in these bills that deal with so many aspects of other areas of policy in some ways you find the character of a government—you find the small details that put in place aspects of broader policy and you are reminded of policies that were implemented a year before that require a change to tax law. In this case, you find very real indications of the government's commitment to retirement income, to simplifying things for business and to clarifying and simplifying the law across a range of areas.

Before I get to the fun bit, which is the Tax Laws Amendment (2011 Measures No.9) Bill 2011, I do have to respond to the member for Moncrieff's opening remarks. I find it quite extraordinary that anybody would question the Labor government's commitment to retirement incomes. After all, it was Labor that fought so hard through those very difficult reform years back in the eighties and nineties to make super available to the general population and then to increase it to nine per cent. That was not a simple reform. It was perhaps one of the hardest reforms we have seen a government undertake for many years. It is the Labor government now that is committed to increasing super contributions to 12 per cent. I note the remarks by the member for Moncrieff about the cost of living. To say that working with an inflation rate in the band recommended by the Reserve Bank is the most outrageous increase in the cost of living in human memory, or he said something similar, is quite an extraordinary statement. Perhaps he should have a closer look at the real economic figures and pay a little less attention to his fantasy life.

There is a third element to retirement incomes and that, of course, is jobs. Perhaps it is the most important one because, without a job, you do not have much of a chance of accumulating retirement income at all. We have seen an opposition that has not supported this government's very strong commitment to retaining jobs and growing jobs. Through the global economic crisis, when this government put forward a stimulus package specifically designed to ensure that as many Australians as possible kept their jobs while the rest of the world were shedding theirs, we did not see support from the opposition. We have not seen support from the opposition for programs that strengthen the car industry in Australia, an incredibly important area of the Australian economy that not just keeps many tens of thousands of people employed but provides the skill base that flows through other manufacturing sectors. Similarly we have not seen support from the opposition for the aluminium industry, an extremely important part of our economy. So I would suggest to the member for Moncrieff that perhaps he could rethink some of his comments. I doubt that he will. I think that, again, the fantasy world he lives in is a far more interesting one for members of the opposition than reality. It was an unfortunate and rather misleading contribution.

Now back to the fun bit: the Tax Laws Amendment (2011 Measures No. 9) Bill 2011, which is so interesting that they even have the date in it twice. They always do and I cannot quite figure that one out, but I am sure the guys from Treasury will one day explain to me why all the tax laws have the date twice. There are six schedules in this bill. Schedule 1 is about portability of superannuation. We heard one of the earlier speakers talk at length about this. It is a particularly interesting area. At the moment, we all know that there are many Australians who have lost touch with their superannuation or their superannuation has lost touch with them—one way or the other. In other words, there is money out there that belongs to them but is, essentially, out of their grasp. The government has already created some easier pathways for people to find their super through the lost super website. In my electorate we have already been out with mobile offices all over the electorate, encouraging people to come in and logon and try to find their lost super. If you ever have tried to consolidate your superannuation, if you are a normal person in the street who does not follow these things closely, it becomes quite a complicated process.

Schedule 1 amends the Superannuation Industry (Supervision) Act 1993 and the Retirement Savings Accounts Act 1997—two fine bills—to enable certain superannuation fund members to electronically request the consolidation of their superannuation benefits through the ATO. It is referred to as the electronic portability form. Essentially it means that it will be much easier, through a phone call to the ATO and then logging on to an ATO website, to have their lost superannuation funds consolidated through the ATO.

It is quite a clever little device. It makes it much simpler and easier for lost superannuation fund members to consolidate their benefits. Essentially, that helps people to reduce the fees they pay on multiple accounts and to maximise their retirement benefits. Again, this is a seemingly quite simple improvement but it is one that reflects a longstanding commitment of this government to the development of the retirement incomes of everyday Australians. This measure was supported by both the Australian Institute of Superannuation Trustees and the Association of Superannuation Funds of Australia.

Schedule 2 makes improvement to the capital gains tax law to make it easier for businesses to restructure. Under current law, taxpayers can obtain the capital gains tax rollover for a capital gain or loss that arises from their interest in a company or a trust because of the demerger of an entity from the group of which the company or trust is the head entity. However, this is not available where the head entity is a corporation sole or complying superannuation entity and schedule 2.2 of the bill makes the situation more consistent, making the rollover available for both of those types of bodies. It removes barriers to business restructures of a certain type by broadening access to various CGT rollovers. The changes are absolutely consistent with the government's long-term objective of promoting flexibility for business. Once again, this is a small change that reflects an attitude in a broad policy area that this government has been working on now for nearly four years.

Schedule 3 concerns the GST financial supply provisions. It reduces compliance costs for small businesses by increasing the financial acquisitions threshold from $50,000 to $150,000. If a small business makes a financial acquisition below this amount it falls outside the financial supply regime and can claim input tax credits for its financial supplies. Increasing the threshold takes more small businesses outside of the financial supply regime. Many small businesses in my area will think that a very fine thing. The bill implements three of the seven recommendations agreed to by the government arising out of the Treasury's review of the GST financial supply provisions.

Something interesting that this bill does is amend the GST treatment of hire purchase, again something that is going to benefit a large number of small businesses in my electorate and around the country. There are two current credit arrangements, hire purchase and chattel mortgage. They have very similar credit arrangements. But they have very important differences which carry through to their tax treatment. In both cases, essentially the purchaser obtains the use of the asset upfront in return for a series of payments made in instalments. In hire purchase, ownership does not transfer until the final payment. In chattel mortgage, ownership transfers upfront.

All else being equal, hire purchase is usually preferred over chattel mortgage. Chattel mortgage has an increased risk for the lender because the title has already changed hands and if there is a default repossession is difficult and may not be possible. Hire purchase is far less costly to implement in terms of legal fees and stamp duties. You would normally expect to see, particularly in the small business area, hire purchase being used to a far greater extent than chattel mortgage. That is not the case in Australia since the introduction of the GST. In fact, since the GST was introduced chattel mortgage has largely replaced the use of hire purchase in small businesses, even though chattel mortgage is more expensive, more complex and involves greater risk for the finance company.

The reason for that is because the GST operates differently for the two systems, particularly if the small business runs its accounts on a cash basis. Small businesses with an annual GST turnover of less than $2 million can account for GST on a cash basis, whereas larger business must account on an accrual basis. Cash accounting is simpler and reduces compliance costs, which is why small businesses like it. But the tax effect is that the larger firms account for their GST liability and input tax credits for hire purchase agreements upfront whereas small businesses that account for GST with cash account for it when each payment is made.

Under this amendment, the treatment of GST for small businesses that account on a cash basis becomes the same as that for larger companies. That will result in a significant cash flow benefit for small businesses compared to the current situation. Again, that is something that appears to be quite a small change but it will reduce the compliance costs, the administrative burden and the risk for many businesses in Australia—quite a nice little change.

Schedule 4 involves the GST treatment of new residential premises. The amendments will essentially reverse the effect of the court case involving Gloxinia Investments, which found that, where a particular combination of strata titles and leases were involved, newly constructed residential premises were not subject to GST. The bill reaffirms the policy intent that newly constructed homes should be subject to GST and will also protect the revenue that funds government services that assist the whole of the community. The measure will ensure that GST is payable on the full value added to newly constructed residential premises by developers and builders. This is achieved by ensuring that GST is applied to the retail sale of new residential premises to homeowners and investors, as well as the wholesale supply of the premises to the developer or builder. Schedule 5 I am only going to speak about very briefly. It involves tax deductible recipients. Under the current law, taxpayers can claim an income tax deduction for certain gifts to organisations with deductible gift recipient status. This amendment lists donations to the Rhodes Trust Australia appeal to be claimed as a tax deduction. This is a fairly routine amendment, unless you happen to be the Rhodes Trust Australia or you happen to want to donate to them. It is a very good outcome for the Rhodes Trust.

There are a number of miscellaneous amendments in schedule 6 that I will not go into. They are mainly quite administrative—too administrative even for a person who loves tax or amendments. Again, it is a rather nice little collection of amendments that reduce complexity for small business, clarify tax law and have benefits for cash-flow management for small business. I commend the bill to the House.