Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Monday, 19 March 2018
Page: 1457


Senator FIERRAVANTI-WELLS (New South WalesMinister for International Development and the Pacific) (17:23): I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

TREASURY LAWS AMENDMENT (REDUCING PRESSURE ON HOUSING AFFORDABILITY MEASURES NO. 2) BILL 2018

SECOND READING SPEECH

This Government wants all Australians to be able to buy a home and access housing that is affordable.

Housing is fundamental to the wellbeing of all Australians and is a driver of social and economic participation, promoting better employment, education and health outcomes.

This Bill implements measures announced in the Government's 2017-18 Budget housing package to improve housing affordability, encourage investment in affordable rental housing and improve the integrity of the tax system.

The measures in this Bill support those already introduced by the Turnbull Government as part of the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017.

This Bill is an important step to ensuring home ownership is more achievable for Australians.

Schedule 1 to this Bill delivers on the Government's commitment to implement stronger rules for foreign residents owning Australian housing to reduce pressure on housing affordability.

Schedule 2 to this Bill contains technical amendments to support changes announced in the 2017-18 Budget to streamline the foreign investment framework.

Schedule 3 to this Bill delivers on the Government's commitment to introduce tax incentives to boost investment in affordable housing, to create the right incentives and improve outcomes for those in need.

I will now discuss each of these schedules in more detail.

Schedule 1 to this Bill implements two of three reforms announced in the 2017-18 Budget, to improve tax integrity and reduce pressure on housing affordability by changing the capital gains tax rules for foreign residents.

Firstly, foreign residents will be denied access to the main residence capital gains tax exemption from 7.30pm AEST on 9 May 2017.

A grandfathering arrangement will apply for properties already held at that time, with the change taking effect for these properties from 1 July 2019.

The main residence exemption allows individuals to disregard a capital gain they make on the sale of a property established as their main residence.

No longer allowing foreign residents to claim this exemption will send a clear message that foreign residents will have to comply with our stringent capital gains tax rules.

Secondly, this schedule addresses an integrity issue with the capital gains tax rules for foreign residents that hold indirect interests in Australian real property, such as land, from 7.30pm AEST on 9 May 2017.

Foreign residents are required to pay tax on capital gains made in relation to interests in Australian real property, including indirect interests, where certain tests are met.

This reform addresses an integrity issue with one of these tests—the principal asset test—to require a foreign resident to consider any interests held by its associates, if it disposes of an indirect interest in Australian real property for example by selling shares in a land rich company.

This integrity fix will ensure that the principal asset test cannot be circumvented by disaggregating holdings of membership interests.

I would like to thank those that contributed to the public consultation on the draft legislation for these two reforms, held between 21 July and 15 August 2017.

The third reform announced in the 2017-18 Budget, expanding the foreign resident capital gains tax withholding regime, has already been enacted and came into effect on 1 July 2017. The regime was expanded by increasing the withholding rate from 10 per cent to 12.5 per cent, and decreasing the withholding threshold from $2 million to $750,000 to capture more properties.

Combined, these three integrity measures are expected to have a gain to revenue of $570.0 million over the forward estimates period.

Schedule 2 to this Bill contains technical amendments that introduce a reconciliation fee on developers for dwellings sold to foreign persons under a near-new dwelling exemption certificate. The near-new dwelling exemption certificate was introduced through regulatory amendments that took effect from 24 June 2017.

Schedule 3 to this Bill allows resident investors in qualifying affordable rental housing to obtain a capital gains tax discount of up to 60 per cent from 1 January 2018.

Currently, capital gains arising from the sale of capital gains tax assets of individuals that are held for at least 12 months generally receive a 50 per cent capital gains discount. This includes residential investment properties that are supplied for affordable housing.

Under this measure, an additional capital gains tax discount will be available to resident investors who hold affordable housing directly or through certain trusts, such as holding units within a managed investment trust.

Qualifying affordable housing will need to be managed through a registered community housing provider and provided as affordable housing for at least three years.

Community housing providers will be responsible for assessing tenant eligibility. The Government does not want to duplicate state and territory housing policies, so community housing providers will need to assess tenant eligibility against relevant state and territory housing policies and registration requirements.

This measure encourages increased investment in affordable rental housing and forms part of the Government's broader housing affordability package announced in the 2017-18 Budget.

This measure is estimated to have a cost to revenue of $15.0 million over the forward estimates period.

I would like to thank those that contributed to the public consultation on the draft legislation for these measures.

In conclusion, the Government through this Bill is creating the right incentives as part of our comprehensive and targeted plan to improve outcomes across the housing spectrum.

Full details of these measures are contained in the Explanatory Memorandum.

FOREIGN ACQUISITIONS AND TAKEOVERS FEES IMPOSITION AMENDMENT (NEAR-NEW DWELLING INTERESTS) BILL 2018

SECOND READING SPEECH

This Bill contains technical amendments that support changes announced in the 2017-18 Budget that streamlined the foreign investment framework.

These amendments introduce a reconciliation fee on developers for dwellings sold to foreign persons under a near-new dwelling exemption certificate. The near-new dwelling exemption certificate was introduced through regulatory amendments that took effect from 24 June 2017.

This Bill is further evidence of the Government, getting on with the job, reducing compliance, making the law more fair and getting reforms done.

Full details of the measure are contained in the Explanatory Memorandum.

The ACTING DEPUTY PRESIDENT ( Senator Reynolds ): In accordance with standing order 115(3), further consideration of these bills is now adjourned to 23 March 2018.