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Monday, 18 June 2018
Page: 3128

Senator FIFIELD (VictoriaMinister for Communications, Minister for the Arts and Deputy Leader of the Government in the Senate) (17:43): I table a revised explanatory memorandum relating to the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018, and 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—


This Bill enhances the integrity of Australia's tax system with the introduction of the Government's response to the Black Economy Taskforce interim report.

The Turnbull Government established the Black Economy Taskforce in December 2016 to develop a whole-of-government response for tackling the black economy.

The black economy extends from organised crime to individuals and businesses that operate outside the tax and regulatory system, understating their income and avoiding their obligations to report to the Australian Taxation Office, Centrelink and child support agencies among others.

More broadly, participation in the black economy undermines community trust in the tax system, creates an uneven playing field among competing businesses and results in the loss of government revenue.

The use of technology to hide income, and the non-reporting or understating of income by contractors, are two black economy activities targeted in this Bill.

The Turnbull Government is committed to improving tax fairness among businesses and strengthening the integrity of our tax system. We are committed to collecting tax properly payable from those who are dodging their liability.

Schedule 1 to this Bill creates new offences to ban the manufacture, distribution, possession, sale and use of electronic sales suppression tools.

There is no legitimate reason for these tools. They remove transactions from electronic record keeping systems, falsify transactions to reduce the amount of each sale and modify GST taxable sales to GST non-taxable sales. And they leave no audit trail.

These new, strict liability offences target each stage of the supply chain - manufacture and production, supply and use of electronic sales suppression tools. Heavy penalties can be imposed in order to deter the use of this technology across the supply chain.

Schedule 2 introduces compulsory reporting to the ATO by businesses with operations in the courier and cleaning industries.

The Black Economy Taskforce identified that contractor payments in the courier and cleaning industries are areas of high risk for the non-reporting of income. The Government is therefore extending the Taxable Payments Reporting System to the courier and cleaning industries.

The Taxable Payments Reporting System applies to entities holding an Australian Business Number that provide services in identified industries and who pay contractors in those industries for their services..

The Black Economy Taskforce found that non disclosure of income to the ATO by contractors in the cleaning and courier sectors was widespread.

Schedule 2 requires the entity that has paid for sub-contracted courier or cleaning services to report these payments to the Tax Office.

Reporting of payments will simplify income matching and prevent evasion. The reporting will also allow the ATO to target compliance activity.

The Taxable Payments Reporting System has been successful. Its implementation in the building and construction industry led to improvements in contractor compliance with GST and income disclosure.

Where the entity making the payment has only a small part of its business in either the cleaning or courier industry - less than 10 per cent by reference to GST turnover- they will be exempt from the reporting requirement.

This strikes the right balance between targeting the risk of non-disclosure of payments received by contractors and maintaining a proportionate compliance burden aligned to the level of the business activity of the paying entity.

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


This Bill represents another important step in the Government's efforts to protect Australia's tax base from multinational tax avoidance. The Bill also improves the integrity of the small business capital gains tax concessions, contributes to the Government's digital innovation agenda and makes the taxation of Defence Abuse Repatriation payments fairer.

Schedule 1 of this Bill amends the income tax law to toughen the multinational anti-avoidance law. The law took effect from 1 January 2016 and prevents large multinationals from avoiding tax on their Australian business profits by artificially structuring their affairs in a way that results in them not having a taxable presence in Australia.

Schedule 1 will improve the integrity of the multinational anti-avoidance law by bringing schemes involving the interposition of certain trust or partnership arrangements within its scope.

This is a further demonstration of the Government's strong track record on tackling multinational tax avoidance. Together with other key Government initiatives, such as the Diverted Profits Tax, Country-by-Country reporting, updated Transfer Pricing rules and the Organisation for Economic Cooperation and Development Multilateral Instrument, this measure will ensure that multinationals pay the right amount of tax on their Australian income.

The Government is committed to assisting small businesses. With over 3 million small businesses in Australia, the small business sector plays a significant role in the Australian economy. Small businesses contribute around $380 billion to the economy. A strong small business sector means more jobs for Australians and more opportunities to build vibrant local communities across the country.

Schedule 2 of this Bill amends the Income Tax Assessment Act 1997 to improve the integrity of the small business capital gains tax concessions.

These important concessions provide small business owners with relief from capital gains tax on the disposal of assets related to their business. This helps them to grow and re-invest their profits, as well as contribute to their retirement savings through the sale of their business.

Currently, some taxpayers can access these concessions for assets which are unrelated to their small business.

That is why, in the 2017-18 Budget, we announced that we would take action to improve the integrity of these concessions.

Schedule 2 of this Bill will introduce additional conditions that must be met where a taxpayer sells their share in a company or interest in a trust. These conditions will test the size of the business being disposed of so that taxpayers can only obtain the concessions in respect of genuine small businesses.

Additional tests will apply to prevent the concessions from being available for shares in companies or interests in trusts where most of the value of that company or trust is unrelated to small business activities.

The concessions themselves are not changing. They will continue to be available to genuine small business taxpayers with an aggregated turnover of less than $2 million or business assets less than $6 million.

The Government is also committed to supporting the Australian innovation ecosystem by providing a tax and regulatory environment that will help innovative Australian businesses raise capital, grow and succeed.

Schedule 3 of this Bill amends the income tax law to clarify that Early Stage Venture Capital Limited Partnerships and Venture Capital Limited Partnerships can make investments in FinTech businesses.

These amendments will provide certainty to investors in innovative FinTech businesses and Australian innovation more generally.

The amendments allow Early Stage Venture Capital Limited Partnerships and Venture Capital Limited Partnerships to invest in entities with predominant activities that include the development of technology for use in finance, insurance or making investments. The development of technology is not intended to be narrowly interpreted and extends to adapting existing technology to a new purpose, such as in developing a novel product or service.

The amendments also allow Innovation and Science Australia to make public and private findings on the eligibility of investments, to ensure stakeholders can obtain certainty around the eligibility of their investments and improve integrity.

This is a further illustration of the Government's ongoing commitment to support Australia's FinTech sector and help establish Australia as a leading global FinTech hub.

Schedule 4 of this Bill amends the income tax law to ensure the reparation payments, recommended by the Defence Force Ombudsman, are exempt from income tax.

Defence has zero tolerance for abuse and has well established frameworks to encourage individuals to report abuse.

Reparation payments recognise that abuse is wrong and should not have occurred.

The payments are not intended to be compensation and complainants are not required to release the Commonwealth from liability.

As announced in the 2017-18 Budget, the Defence Force Ombudsman role has been expanded to make recommendations for reparation payments related to complaints of abuse in Defence.

This Bill ensures that the recipient of a reparation payment receives the full benefit of the payment by making it exempt from income tax. In this way this Bill aligns the tax treatment of reparation payments recommended by the Defence Force Ombudsman with the tax treatment of reparation payments made through the Defence Abuse Response Taskforce.

Full details of all of the measures contained in this Bill are contained in the explanatory memorandum.


This Bill amends the Medicare Levy Act 1986 and A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Act 1999 to increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners in line with increases in the consumer price index. These changes will ensure that low-income households who did not pay the Medicare levy in the 2016-17 income year will generally continue to be exempt in the 2017-18 income year if their incomes have risen in line with, or by less than, the consumer price index.

The Medicare levy low-income thresholds ensure that people who pay no personal income tax due to their eligibility for structural offsets — such as the low-income tax offset or the seniors and pensioners tax offset — generally do not incur the Medicare levy.

The changes to the thresholds mean that no Medicare levy will be payable for individual taxpayers with taxable income that does not exceed $21,980 in 2017-18 (increased from $21,655). Single seniors and pensioners with no dependants who are eligible for the seniors and pensioners tax offset will not incur a Medicare levy liability if their taxable income does not exceed $34,758 (increased from $34,244).

Further, in combination with the individual thresholds, couples and families who are not eligible for the seniors and pensioners tax offset will not be liable to pay the Medicare levy if their combined taxable income does not exceed $37,089 (increased from $36,541). Couples and families who are eligible for the seniors and pensioners tax offset will not be liable to pay the Medicare levy if their combined taxable income does not exceed $48,385 (increased from $47,670). The thresholds for couples and families go up by $3,406 for each dependent child or student (increased from $3,356).

These new thresholds will apply to the 2017-18 income year and future income years.

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


I would like to thank the Senators who contributed to the debate on this Bill.

The purpose of the Veterans' Affairs Legislation Amendment (Veteran-centric Reforms No. 2) Bill is to implement several new initiatives to deliver a range of services to veterans and their families to give them the support and services they need.

I recognise the Australian community has a clear expectation veterans and their families will be well looked after, long after their service ends.

This Bill demonstrates the commitment this Government made in 2016 to put veterans first and continues on from the eight measures we introduced earlier this year under the Veterans' Affairs Legislation Amendment (Veteran-centric Reforms No.1) Act 2018.

Schedule 1 of the Bill would enable a veteran who is studying fulltime as part of an approved return to work rehabilitation plan to be paid their incapacity payments at 100 per cent of their normal weekly earning after 45 weeks.

Currently, a person's incapacity payments "step down" to 75 per cent (or a higher percentage depending on weekly hours worked) of normal earnings after a period of 45 weeks.

We know the best type of support for our ex-service men and women is the economic independence that comes with a job.

Which is why we will continue to promote employment for veterans by ensuring the business community recognises the many benefits of employing a veteran.

We want to encourage and support our veterans get back into the workforce, and assisting them financially while they study as part of a rehabilitation plan is one important way we can do this.

Participation in a Department of Veterans' Affairs rehabilitation plan may include study to assist a veteran in returning to ongoing meaningful employment outside of the Australian Defence Force. For veterans participating in a rehabilitation plan, and in approved full-time study, their incapacity payment will not be reduced after 45 weeks.

Injured veterans are naturally concerned about their, and their family's ongoing financial security. The amendments would allow those former members studying full time as part of their approved rehabilitation plan to focus on their study and not be concerned about financial matters.

As we know more than 5,000 men and women leave the service each year. This measure aims to make a real difference to how injured servicemen and women who are leaving the Australian Defence Force manage the transition to civilian life, in particular for those undertaking full time study. This measure promotes veterans' employment and builds on the Jobs and Growth measures announced in the 2017-18 Budget.

Schedule 2 of the Bill would give effect to a new Veteran Suicide Prevention pilot.

Reducing suicide, including among veterans, is a key priority for the Government. Consistent with this focus, the Government is committed to improving veterans' mental health. Suicide is an issue that affects many Australians, and the ex-serving community is not immune. The 2017 National Mental Health Commission's review of suicide prevention services reinforces that suicide prevention is a complex issue that requires a multi-faceted service response.

The Government takes this issue seriously and is working to ensure that members of the ex-serving community experiencing mental health issues can access the support they need. The Veteran Suicide Prevention pilot will provide mental health support for veterans who have been hospitalised after attempted suicide, suicide ideation or who may be at increased risk of suicide because of their mental health or other factors. The Veteran Suicide Prevention pilot will target a small subset of veterans with complex mental and social health needs, including homelessness.

The Pilot will deliver a 'step down' service that takes into account factors that may lead to suicide, such as primary health, financial stress, housing and employment. The Veteran Suicide Prevention pilot will provide intensive services to ensure the veteran is accessing treatment and provide support to reduce the risk of suicide and enhance the quality of life for participating veterans.

This measure not only sets out to provide intensive support for up to 100 veterans who are have complex mental health challenges but its evaluation will also inform future policy direction for veterans' mental health services.

Schedule 3 would give partners under the Military Rehabilitation and Compensation Act 2004 more time to choose whether to receive the compensation payable for their partner's death as a weekly payment, lump sum or a combination of both.

The proposed amendments would give partners, during what is a very difficult time, two years rather than the current six months to decide how they would like to receive their compensation.

The Commission would retain the discretion to extend the timeframe within which a partner can ask for more time to decide how they would like to receive their compensation, where special circumstances exist, beyond two years. This may be the case where there are complicated family law issues to be resolved, for example.

This measure demonstrates this Government is listening and is putting the veteran community at the centre of decision making so partners and family can determine when they are ready to decide when and how they receive the compensation and support that they need.

Schedule 4 would extend the Long Tan Bursary to the grandchildren of an Australian Vietnam veteran, who has operational service in Vietnam. The Long Tan Bursary is part of the Veterans' Children Education Scheme.

Currently, the Long Tan Bursary Scheme is limited to eligible children of an Australian Vietnam Veteran. The proposed amendments would extend the eligibility so that an eligible grandchild of an Australian Vietnam veteran who has operational service in Vietnam, may apply for and be granted a Long Tan Bursary to enable them to undertake post-secondary education.

The children of Vietnam veterans will remain eligible and their applications for Long Tan Bursaries will be given first priority during the assessment process. This honours the original intent of the scheme.

It also demonstrates we continue to recognise the important contribution of the Vietnam veterans who have given so much to our country to protect our great nation and freedoms and way of life. It is only right we support them and their families.

Schedule 5 would deem a submariner's service on a submarine between 1 January 1978 and 31 December 1992 as operational service, where they served on a Submarine Special Operation during that period.

A deeming provision will enable all submarine service during this period, by persons who have served on Submarine Special Operations, to be treated as operational service. This provision will address the difficulties in determining whether an injury sustained or disease contracted by a submariner is related to service on a secret operation.

This amendment will ensure the classified nature of information about Submarine Special Operations does not hinder access by these personnel to the benefits and entitlements available to those with operational service. In addition, this means submariners who are deemed to have operational service will have their claims assessed against the more generous provisions than those that apply to peacetime service.

This measure gives full effect to the intent of the Clarke Review and will benefit those veterans and their widowers to be able to access the benefits to which they are entitled.

Schedule 6 would enable veterans with Military Rehabilitation and Compensation Act 2004 coverage to lodge a claim for compensation orally. This amendment supports the Veteran-centric reforms being made by the Department of Veterans' Affairs and will lead to improvements for clients.

Currently, a claim for compensation must be made in writing and is distinct from a claim of liability. For those clients who wish to do so, they will be able to continue to make a written claim for compensation.

However, the amendments would mean a client will be asked during a needs assessment telephone call whether they want to make a claim for compensation and their oral statement will be treated as a valid claim under the Act.

This means a client will have the option to make a claim for compensation in writing or orally. This is all about making it easier for our clients to engage with us.

This demonstrates this Government has listened to the concerns and frustrations of veterans and their families and is committed to put them first and at the centre of the decisions we make.

Each of the set of amendments will mean better outcomes for veterans and their families.

I commend this Bill.

Debate adjourned.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.